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

We can calculate the total percentage return on investment using the following formula:

Total Percentage Return = (Interest Payment + (Proceeds from Sale - Purchase Price)) / Purchase Price

Plugging in the values, we get:

Total Percentage Return = (100 + (975 - 900)) / 900
Total Percentage Return = 175 / 900
Total Percentage Return = 0.194 or 19.4%

Therefore, the correct answer is D) 19.4%.

You Purchased a Bond for $900 One Year Ago