What is the rate of return for an investor who pays $1,011.55 for a three year bond with a 6.1% coupon paid annually and a face value of $1,000 and sells the bond one year later for $989.54? Enter your answer as a percentage.
Rate of return:
= ($989.54+$61-$1,011.55)/$1,011.55
= 3.85%
Hence, rate of return is 3.85%
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