What Is the Rate of Return for an Investor Who

question 47

Multiple Choice

What is the rate of return for an investor who pays $1,054.47 for a three-year bond with a 7 percent coupon and sells the bond one year later for $1,037.19?

• A)5.00 percent
• B)5.33 percent
• C)6.46 percent
• D)7.00 percent Rate of Return = ($70.00 - $17.28)/$1,054.47
• = $52.72/$1,054.47

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Definitions:

Gift

A transfer of property or funds from one person to another without any expectation or requirement of payment or compensation.

Intangible

Assets or properties that do not have physical substance, such as patents, copyrights, or brand reputation.

Material Facts

Important facts that could influence a decision maker’s conclusion or outcome in a legal, financial, or commercial context.

Insurer

A company or entity that provides financial protection against specified risks in return for premiums.