A bond has a face value of $25000 and pays an annual coupon rate of 5.2%. The bond is selling for $25000 now and is expected to be sold for $25080 one year from now. What is the bond's expected rate of return? Answer: %

A bond has a face value of $25000 and pays an annual coupon rate of 5.2%. The bond is selling for $25000 now and is expected to be sold for $25080 one year from now. What is the bond's expected rate of return? Answer: %

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

A bond has a face value of $25000 and pays an annual coupon rate of 5.2%. The
bond is selling for $25000 now and is expected to be sold for $25080 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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