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A savvy investor paid $9,000 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 $12,500 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 $9,000 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 $12,500 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 %. %.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A savvy investor paid $9,000 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 $12,500 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 %. %.
Transcribed Image Text:A savvy investor paid $9,000 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 $12,500 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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