Question

14. If you pay $1,000 for a 30-year bond that pays $60 at the end of each year, what compound rate of return would you earn if you hold the bond full-term, and if do not re-invest the coupon stream? А)796 B) 65% C) 2.57% D) 3.49%. E) 4.57% 15. what rate of return did you earn ifyou reinvested at an annual rate of 6%? A15.7% B) 5.8% c) 6%

Answer 1

1.
=((60*30+1000)/(1000))^(1/30)-1=3.4916%

2.
=((60/6%*(1.06^30-1)+1000)/(1000))^(1/30)-1=6.0000%