An investor buys a five-year, 9% coupon bond for $975, holds it for one year and...
An investor buys a five-year, 9% coupon bond for $975, holds it for one year and then sells the bond for $985. What was the investor's rate of return?
The solution given was:
975 = 90/(1+r) +$985/(1+r)
r =10.26%
What was the original formula the above solution was derived from?
Homework Answers
Interest=face value of bond*coupon rate
=$1,000*9%
=$90
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