A savvy investor paid $6,000 for a 20-year $10,000 mortgage bond that had a bond interest rate of 8% per year, payable quarterly. Three years after he purchased the bond, market interest rates went down, so the bond increased in value. if the investor sold the bond for $11,000 three years after he bought it, what rate of return did the investor make per quarter and per year (nominal)? The rate of return per quarter is %. The rate of return per year is %.
A savvy investor paid $6,000 for a 20-year $10,000 mortgage bond that had a bond interest rate of 8% per year, payable quarterly. Three years after he purchased the bond, market interest rates went down, so the bond increased in value. if the investor sold the bond for $11,000 three years after he bought it, what rate of return did the investor make per quarter and per year (nominal)? The rate of return per quarter is %. The rate of return per year is %.
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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Transcribed Image Text:A sawy investor paid $6,000 for a 20-year $10,000 mortgage bond that had a bond interest rate of 8% per year, payable quarterly.
Three years after he purchased the bond, market interest rates went down, so the bond increased in value. If the investor sold the
bond for $11,000 three years after he bought it, what rate of return did the investor make per quarter and per year (nominal)?
The rate of return per quarter is
%.
The rate of return per year is
%.
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