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Vanyuwa [196]
2 years ago
5

Suppose that today you buy a bond with an annual coupon rate of 10 percent for $1,120. The bond has 17 years to maturity. What r

ate of return do you expect to earn on your investment
Business
1 answer:
andre [41]2 years ago
4 0

Answer:

8.63%

Explanation:

The expected rate of return on the bond can be determined using a financial calculator bearing in mind that the calculator would be set to its end date before making the following inputs:

N=17(number of annual coupons in 17 years)

PMT=100(annual coupon=face value*coupon rate=$1000*10%=$100)

PV=-1120(the current price is $1,120)

FV=1000(the face value of the bon is $1000)

CPT

I/Y=8.63%

EXCEL APPROACH:

=rate(nper,pmt,-pv,fv)

nper=N=17

=rate(17,100,-1120,1000)

rate=8.63%

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Explanation:

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Calcular el valor futuro de $2,500 que se ahorran al final de cada mes por un periodo de 4 años con una tasa de interés del 9% a
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Answer:

VF= $143.801,78

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