A bond buyer paid 900 for a bond that will be valued at 1000$ at maturity, in three months. What is the annualized rate of return on this bond?
Buy Price of Bond = $900
In 3 months, bond will mature at $1000
Annualized Rate of return
where, n = no of periods = 3 months/12 months = 0.25
Annualized Rate of return
= 1.524158 - 1
= 52.4158%
So, the annualized rate of return on this bond is 52.4158%
A bond buyer paid 900 for a bond that will be valued at 1000$ at maturity,...
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