A 2-year maturity bond with face value of $1,000 makes annual coupon payments of $80 and is selling at face value. What will be the rate of return on the bond if its yield to maturity at the end of the year is: Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. 1. 6% - 2. 8% - 3. 10% -

Microeconomics
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ISBN:9781337617406
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter16: Interest, Rent, And Profit
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A 2-year maturity bond with face value of $1,000 makes annual coupon payments of $80 and is selling at face value. What will be the rate of return on the bond if its yield to maturity at the end of the year is:

Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.

1. 6% - 
2. 8% - 

3. 10% - 

Expert Solution
Step 1

A rate of return (ROR) refers to a net loss or gain on an investment over a defined time frame, and shown as a percentage of the initial cost of an investment.

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