What Is the Return on a 5 Percent Coupon Bond

question 20

Multiple Choice

What is the return on a 5 percent coupon bond that initially sells for $1,000 and sells for $900 one year later?

• A) 5 percent
• B) 10 percent
• C) -5 percent
• D) -10 percent
• E) None of the above

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Definitions:

Price Level

A measure of the average prices of goods and services in the economy at a given time, often used to assess inflation rates.

Stock Variable

A quantity measured at a specific point in time, representing a snapshot of a certain economic variable such as capital or debt.

Periodic Variable

A variable that changes at regular intervals over time in a predictable pattern.

Dummy Variable

A numerical variable used in regression analysis to represent subgroups of the sample in your study.