An Investor Buys a 5-Year $1,000, 9% Coupon Bond for $975

question 72

Multiple Choice

An investor buys a 5-year $1,000, 9% coupon bond for $975, holds it for 1 year, and then sells the bond for $985.What was the investor's rate of return?

• A)9.00%
• B)9.23%
• C)9.65%
• D)10.26%

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Definitions:

Island Arcs

Curved chains of volcanic islands that form along the convergent boundaries of tectonic plates, typically over a subducting plate.

Transform Fault

A type of fault wherein two tectonic plates slide past each other horizontally, often associated with significant seismic activity.

Mid-ocean Ridge

An underwater mountain range, formed by plate tectonics, that stretches across the ocean floor, marking sites where new oceanic crust is created by volcanic activity.

Linear Island Chain

A sequence of islands that form in a straight line, often over a volcanic hot spot, as a tectonic plate moves over it.