What is the rate of return for an investor who buys a four-year bond for $942.50 with a 7.5% coupon paid annually and a face value of $1,000, and sells it one year later for $975.25?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter6: Fixed-income Securities: Characteristics And Valuation
Section: Chapter Questions
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What is the rate of return for an investor who buys a four-year bond
for $942.50 with a 7.5% coupon paid annually and a face value of
$1,000, and sells it one year later for $975.25?
Transcribed Image Text:What is the rate of return for an investor who buys a four-year bond for $942.50 with a 7.5% coupon paid annually and a face value of $1,000, and sells it one year later for $975.25?
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