How can the future value of coupons be more than the actual coupons themselves? For example: there is a quoted future on a 1.2 year T Bond that pays 7% while the risk free rate is 5%. The semi annual coupons are $35 with one due in .5 years from now and .7 years until maturity and another due in 1 year with .2 years until maturity.
FVC= (35x1.050.7) + (35x1.050.2) = 71.56
Is this because the underlying assumption is that the coupon payments will be reinvested at the same interest rate?