An investor just purchased an annual 14 year bond that pays $50 each year for 14 years, and $1,000 in the final year. The investor believes she can reinvest the coupon payments each year at a 4.5%, interest rate.
If the yield to maturity on the bond is 4.25%, then what is the price of the bond?
How much money will the investor have in 14 years, if he reinvests the coupon payments at the 4.5% interest rate?