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An Investor Buys a 10-Year $1,000, 7% Coupon Bond for $1,050

question 54

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An investor buys a 10-year $1,000, 7% coupon bond for $1,050, holds it for 1 year, and then sells it for $1,040.What was the investor's rate of return?


Definitions:

Ordinary Course

Actions and transactions that are routine or normal for a particular business or industry, typically excluding extraordinary or unusual activities.

Security Interest

A legal claim or lien on collateral that gives a lender the right to repossession if the borrower defaults on the agreement.

Legal Enforceability

The characteristic of a contract or agreement that allows it to be upheld or compelled by law.

Perfection

The state of being free from all flaws or defects, or achieving the highest degree of excellence.

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