What is the rate of return on a bond with a coupon of $38 payable in one year that was purchased for $950 and sold one year later for $931?
A) 2%
B) 4%
C) 6%
D) 19%

Name: What is the rate of return on a bond with a coupon of $38 payable in one year that was purchased for $950 and sold one year later for $931? A) 2% B) 4% C) 6% D) 19%
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Question

Quizplus · Accepted Answer

The rate of return is calculated as (Coupon + (Selling Price - Purchase Price)) / Purchase Price. Here, it is ($38 + ($931 - $950)) / $950 = $19 / $950 = 2%.

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