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Unformatted text preview: =$3,746.06 The coupon payments = $1,400. b The interest on interest = $2,346.06. e. Interest on Interest = 06 . 346 , 2 $ 35 $ 40 06 . 746 , 3 $ 045 . 1 ) 045 . 1 ( 35 40 == + x Problem 3.16 The Coupon Interest plus Interest on interest = The expected price of bond after five years: 14 . 558 $ 2 / 094 . 1 ) 2 / 94 . 1 ( 45 2 5 = + = x FV 53 . 961 $ ) 2 / 112 . 1 ( 000 , 1 $ ) 2 / 112 . 1 ( 1 1 2 / 112 . 45 2 2 2 2 = + + += x x B P 2 Problem 3.16 (continued) The semiannual total (horizon) return : b The total (horizon) return = 4.27% x 2 = 8.55% h B r P Dollars Future Total h / 1 _ _ = % 27 . 4 1 000 , 1 $ 53 . 961 14 . 558 $ 10 / 1 = + = r h...
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 Spring '10
 nasseh
 Interest, Interest Rate

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