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You purchase a $1,000 par bond on 1/1 for $950 that pays a 7.5% annual coupon....

You purchase a $1,000 par bond on 1/1 for $950 that pays a 7.5% annual coupon. You sell the bond exactly 1 year later for $990.

What is the dollar return (the return amount) of your investment?

What is the rate of return (the % return) on your investment?

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Answer #1

Let it assume that face value is $1000 So, Sale consideration on bond Add Coupon interest) @7.5% p.a on face value Less Purch

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