Answer:
Rate of return earned in the past year=8.81%
face value | $ 1,000.00 | |
annual coupon rate | 7% | |
maturity | 25 | |
sale price | $ 1,018.10 | |
Formula: | ||
return on investment=(sale price+receipts-purchase price)/purchase price x100 | ||
=(1018.10+(face valuexcoupon rate)-1000)/1000x100 | ||
=(18.1+(1000*7%))/1000*100 | ||
=(18.1+70)/1000x100 | ||
=88.1/1000x100 | ||
8.81% |
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