The return on an asset with a purchase price of $940 and a selling price of $900 and coupon payments of $100 is
A) 6.4 percent.
B) 6.7 percent.
C) 14.9 percent.
D) 15.6 percent.

Question

Quizplus · Accepted Answer

The formula for calculating return on an asset is:

Return = [(Coupon Payment + Selling Price) / Purchase Price] - 1

Substituting the given values in the formula, we get:

Return = [(100 + 900) / 940] - 1
Return = (1000/940) -1
Return = 0.0638 or 6.38%

Rounding it off to the nearest whole number, we get 6.4%.

Therefore, the answer is A) 6.4 percent.

The Return on an Asset with a Purchase Price of $940