Five years ago you purchased an 8% coupon bond for $975. Today you sold the bond for $1,000. (Round your answers to 2 decimal places.)  a. What is your rate of return if all coupons were immediately spent when received?  b. What is your rate of return if all coupons were reinvested in your bank account, which pays 1% interest until the bond is sold?  c. What is your rate of return if all coupons were reinvested at 8.64% until the bond is sold?

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Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.