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Question 15 5 pt Two years ago, Bob purchased a 20-year $1,000 par value zero-coupon bond for $311.80. If today (with 18 year
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Answer #1

Current bond price can be calculated by using the following excel formula:
=PV(rate,nper,pmt,fv)
=PV(4.65%,18,0,-1000)
= $441.26

Annualized return can be calculated by using the following excel formula:
=RATE(nper,pmt,pv,fv)
=RATE(2,0,-311.80,441.26)
= 18.96%

Annualized return = 18.96%

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