Last year Janet purchased a $1,000 face value corporate bond with a 7% annual coupon rate and a 20-year maturity. At the time of the purchase, it had an expected yield to maturity of 8.18%. If Janet sold the bond today for $935.50, what rate of return would she have earned for the past year? Do not round intermediate calculations. Round your answer to two decimal places.
Last year Janet purchased a $1,000 face value corporate bond with a 7% annual coupon rate and a 20-year maturity. At the time of the purchase, it had an expected yield to maturity of 8.18%. If Janet sold the bond today for $935.50, what rate of return would she have earned for the past year? Do not round intermediate calculations. Round your answer to two decimal places.
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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Last year Janet purchased a $1,000 face value corporate bond with a 7% annual coupon rate and a 20-year maturity. At the time of the purchase, it had an expected yield to maturity of 8.18%. If Janet sold the bond today for $935.50, what
Expert Solution
Step 1: Determine Given Variants:
Par value of Bond = $1000
Annual coupon rate =7%
Annual coupon payment = 1000 *7% = $70
Yield to maturity = 8.18%
Number of payments =20
The selling price of the Bond = $ 935.50
Required:
Rate of Return =?
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