A Bond with an Annual Coupon Rate of 12 Percent

question 87

Multiple Choice

A bond with an annual coupon rate of 12 percent and face value of $1,000.00 was purchased for $990.00 and sold two years later for $1,050.00.What was the holding period return?

• A) 15.1%
• B) 18.2%
• C) 30.3%
• D) 28.5%
• E) 30.0%

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Definitions:

Discharged

The completion or termination of an obligation such as a debt or legal duty.

Liability

The state of being legally responsible for something, particularly in terms of debts or legal actions.

Check

A negotiable instrument, commonly used for transactions, instructing a bank to pay a specific amount from the drawer's account to the payee or bearer.

Warranties

Legally binding promises or guarantees about the condition, quality, or performance of goods or services sold, which are enforceable under the sale of goods laws.