A 2-year maturity bond with face value of $1,000 makes annual coupon payments of $80 and is selling at face value. What will be the rate of return on the bond if its yield to maturity at the end of the year is: Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. 1. 6% - 2. 8% - 3. 10% -
A 2-year maturity bond with face value of $1,000 makes annual coupon payments of $80 and is selling at face value. What will be the rate of return on the bond if its yield to maturity at the end of the year is: Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. 1. 6% - 2. 8% - 3. 10% -
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter29: Interest, Rent, And Profit
Section: Chapter Questions
Problem 1WNG
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A 2-year maturity bond with face value of $1,000 makes annual coupon payments of $80 and is selling at face value. What will be the
Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.
1. 6% -
2. 8% -
3. 10% -
Expert Solution
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Step 1
A rate of return (ROR) refers to a net loss or gain on an investment over a defined time frame, and shown as a percentage of the initial cost of an investment.
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