Answered: You own a bond that has a par value of…

You own a bond that has a par value of $1,000 and matures in 5 years. It pays a 5 percent annual coupon rate. The bond currently sells for $1,100. What is the bond's expected rate of return?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 4MC

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Question

Expected return

You own a bond that has a par value of $1,000
and matures in 5 years. It pays a 5 percent
annual coupon rate. The bond currently sells
for $1,100. What is the bond's expected rate of
return?

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