You purchased a bond for $900 one year ago. Today, you receive your only interest payment for the year of $100. The bond can currently be sold for $975. What is your total percentage return on investment? Ignore tax effects.

Question

Quizplus · Accepted Answer

The total return on investment combines the interest received and the capital gain. The interest received is $100, and the capital gain is $975 - $900 = $75. Therefore, the total return is $100 + $75 = $175. The percentage return on the initial investment of $900 is ($175 / $900) * 100% = 19.4%.

You Purchased a Bond for $900 One Year Ago