The U.S. Government 4?% coupon bond has 14 years remaining to maturity. The bond pays annual coupons and the next coupon is due in one year. The face value of the bond is
?$100. The bond is currently trading for $100.00 and yields 4%. If you buy the bond today and hold to? maturity, then how much interest do you earn on reinvested coupons? (assuming coupons reinvested at the yield? rate)? In other? words, if you invest the coupons in a bank that pays 4?% per? annum, then how much interest do you earn just from investing the? coupons?
How much interest do you earn on reinvested? coupons? (Round to the nearest? cent.)