What Is the Expected Rate of Return on a Bond

question 96

Multiple Choice

What is the expected rate of return on a bond that pays a coupon rate of 9% paid semi-annually, has a par value of $1,000, matures in five years, and is currently selling for $1071?

• A) 7.28%
• B) 8.40%
• C) 3.64%
• D) 4.21%

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Definitions:

Cited Advantage

A specific benefit mentioned or referenced, usually to support an argument or to highlight the superiority of a product, idea, or method.

Functional Departmentation

The organization of a company into departments based on specific functions or tasks, such as marketing, finance, or human resources.

Decentralized

A system of management where decision-making authority is distributed among various levels within the organization, rather than concentrated at a single point.

Professional Development

Continuous learning and training activities undertaken by individuals to enhance their skills, knowledge, and competencies required in their professional fields.