if an investor bought a 6% annual coupon bond for $1020 and sold it 2 years...
if an investor bought a 6% annual coupon bond for $1020 and sold it 2 years later for $1080, the annual rate of return on her 2-year investment will be
a)10.65%
b)17.65%
c)11.76%
d)8.47%
Homework Answers
rate of return = sell price - buy price + coupons /buy price
= (1080-1020+60+60)/1020
= 17.65%
hence choose b)
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