What is the total return to an investor who buys a bond for $1,100 when the bond has a 9 percent coupon rate and five years remaining until maturity, then sells the bond after one year for $1,085?
A)6.82 percent
B)6.91 percent
C)7.64 percent
D)9.00 percent

Question

Quizplus · Accepted Answer

The total return includes the coupon payment and the capital loss. The coupon payment is $99 (9% of $1,100). The capital loss is $15 ($1,100 - $1,085). The total return is ($99 - $15) / $1,100 = 7.64%.

What Is the Total Return to an Investor Who Buys