Calculate the Realized Return on a $1,000 Face Value, 9

question 56

Multiple Choice

Calculate the realized return on a $1,000 face value, 9 percent coupon bond (annual) purchased for $800 and sold one year later for $850.

• A) 9%
• B) 11.25%
• C) 14.5%
• D) 17.5%

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Definitions:

Discount

A reduction from the usual cost of something, often applied to encourage buyers.

Preexisting Duty

An obligation that one is already legally bound to perform, which cannot serve as consideration for a new contract.

Extortion

The act of obtaining something, especially money, through force or threats.

Preexisting Duty

Preexisting Duty is a legal principle stating that an action or service required by an existing contract cannot serve as consideration for a new contract.