Assume you purchased a bond for $4,592. The bond pays $107 interest every 6 months. You...

Question

Question

Answer 1

Answer #1

a) Current income = interest income = $107 x 18 months / 6 months = $321

b) Capital gain = sale price - purchase price = $5000 - $4592 = $408

c) Total return in dollars = Current income + Capital gain = $321 + $408 = $729

As % of original investment = $729 / $4592 = 0.1588 or 15.88%

Answer 2

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