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g100num [7]
3 years ago
10

the nominal rate of return is ___ earned by an investor in a bond that was purchased for $953, has an annual coupon of 4% and wa

s sold at the end of year for $1007
Business
1 answer:
Nataliya [291]3 years ago
3 0

Answer: 9.86%

Explanation:

Nominal rate of return given the above values can be calculated as:

= (Price - Purchase price + Coupon payment) / Purchase price

= (1,007 - 953 + 40) / 953

= 9.86%

<em>Coupon = Coupon rate * face value of bond which should be $1,000</em>

<em>= 4% * 1,000</em>

<em>= $40</em>

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