The 1996 Canada Savings Bond issue offered the following annual rates,guaranteed over 10 years: 3% in the first year,followed by 4%,5%,6%,6.50%,6.75%,7%,7,25%,8% and 8.75% in the 10^th year.If you buy one of these bonds today and cash it in after 5 years,what annual rate of return do you earn?

Question

Quizplus · Accepted Answer

The correct answer is A because the annual rate of return is the average of the rates for the first 5 years, which is (3% + 4% + 5% + 6% + 6.5%) / 5 = 4.89%.

The 1996 Canada Savings Bond Issue Offered the Following Annual