You purchase a 3 year coupon bond with a 6% coupon and a 4% yield...
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Finance
You purchase a 3 year coupon bond with a 6% coupon and a 4% yield to maturity. The bond pays interest annually and cannot be called. Which of the following is true regarding your realized annualized return if all payments are made and you reinvest your coupon payments at 4.0%?
| 1. | The return will be less than 4% | |
| 2. | The return will be 4.0% | |
| 3. | The return will be greater than 4.0% | |
| 4. | None of the above as need more information |
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