You are considering the purchase of an unusual corporate bond with a face value of $25,000, which matures in exactly six years. The cost of this bond is $16,000. Based on semiannual interest, what bond equivalent rate of return will be earned on this 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
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You are considering the purchase of
an unusual corporate bond with a
face value of $25,000, which matures
in exactly six years. The cost of this
bond is $16,000. Based on
semiannual interest, what bond
equivalent rate of return will be
earned on this investment?
Transcribed Image Text:You are considering the purchase of an unusual corporate bond with a face value of $25,000, which matures in exactly six years. The cost of this bond is $16,000. Based on semiannual interest, what bond equivalent rate of return will be earned on this investment?
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