What Is the Total Rate of Return on a Bond

question 37

Multiple Choice

What is the total rate of return on a bond with a coupon of $38 payable in one year that was purchased for $950 and sold one year later for $931?

• A) 2%
• B) 4%
• C) 6%
• D) 19%

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Definitions:

Previous Balance

The amount of money that was owed at the end of the previous billing period before any new charges were added.

Cycle Closing

The process of completing a cycle or period, especially in financial contexts, marking the end of an accounting or billing period.

Finance Charge

The total cost of borrowing, including interest along with other charges like service fees or transaction fees.

Previous Balance

The amount of money in an account at the beginning of a new statement period, before any new transactions have been added.