A security promises to pay you $40 every six months for 10 years and at the end of year 10, it will pay you an additional $1,000. If you buy it at $1,100, what is the (annual) return on your investment?
A security promises to pay you $40 every six months for 10 years and at the end of year 10, it will pay you an additional $1,000. If you buy it at $1,100, what is the (annual) return on your investment?
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 security promises to pay you $40 every six months for 10 years and at the end of year 10, it
will pay you an additional $1,000. If you buy it at $1,100, what is the (annual) return on your
investment?
Hint: The number of semi-annual payments for 10 years should be 20.
O 3.31%
8%
6.62%
None of the above
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