A bond has a face value of $15000 and pays an annual coupon rate of 7.2%. The bond is selling for $14990 now and is expected to be sold for $14800 one year from now. What is the bond's expected rate of return?

A bond has a face value of $15000 and pays an annual coupon rate of 7.2%. The bond is selling for $14990 now and is expected to be sold for $14800 one year from now. What is the bond's expected rate of return?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

A bond has a face value of $15000 and pays an annual coupon rate of 7.2%. The
bond is selling for $14990 now and is expected to be sold for $14800 one year from
now. What is the bond's expected rate of return?
Answer:
%
(DO NOT ROUND YOUR CALCULATIONS UNTIL YOU REACH THE FINAL
ANSWER. ENTER YOUR RESPONSE ROUNDED TO TWO DECIMAL PLACES.)

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