What Is the Return on a 5 Percent Coupon Bond

question 46

Multiple Choice

What is the return on a 5 percent coupon bond that initially sells for $1,000 and sells for $1,200 next year?

• A)5 percent
• B)10 percent
• C)-5 percent
• D)25 percent

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Definitions:

Business Combination

A transaction or event where an acquirer gains control over one or more businesses, often through the acquisition of equity interests or assets.

Common Stock

Shares entitling their holders to dividends that vary in amount and may even be missed, depending on the fortunes of the company.

Fair Value

A financial accounting term referring to the estimated market value of an asset, liability, or company.

Par Value

The nominal or face value of a bond, stock, or other financial instrument, originally intended to be the minimum price at which the securities could be sold.