What Is the Expected Rate of Return on a Bond

question 100

Multiple Choice

What is the expected rate of return on a bond that matures in seven years,has a face value of $1,000,a coupon rate of 14%,and is currently selling for $911? Assume annual coupon payments.

• A)7.81%
• B)15.36%
• C)15.61%
• D)16.22%

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Definitions:

Up

A direction or trend indicative of progress, increase, or improvement.

Opposite Directions

Opposite directions refer to the scenario where two or more entities move or act in contrasting pathways or alignments, leading to distinct or divergent outcomes.

Negative

Refers to something that is less than zero, opposite in direction, or detrimental in effect.

Variables

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