Question

can you help step-by-step so I can enter into Excel

are not supported in Tears and have been disabled A1 B с E G H K L M N 1 2 3 D 21. Rate of Return. A bond is issued with a coupon of 4% paid annually, a maturity of 30 years, and a yield to maturity of 7%. What rate of return will be carned by an investor who purchases the bond for $627.73 and holds it for 1 year if the bond's yield to maturity at the end of the year is 8%? (L06-3) gnments 4 5 6 7. Calls 8 9 Files 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Apps Notes VB-4 VB-5 VB-6 VB-7 VB-10 V8-11 Calculation Mode: Automatic Workbook Statistics 29 g х 0576 9 MacBook Air ERS * $ 4 % 5 & 7 2 3 6 8

Answer 1

price of the bond at the end of the year

=(1000*coupon rate)*((1-(1+r)^(-n))/r)+1000/(1+r)^n

=(1000*4%)*((1-(1+8%)^(-29))/8%)+1000/(1+8%)^29

=553.66

rate of return earned=(interest income+capital gain)/purchase price

=(1000*4%+(553.66-627.73))/627.73

=-5.43%