A savvy investor paid $6000 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 $11,500 three years after he bought it, what rate of return did the investor make (a) per quarter, and (b) per year (nominal)?

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A: a.

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A:

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Q: A savvy investor paid $9,000 for a 20-year $10,000 mortgage bond that had a bond interest rate of 8%…

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