Answered: A bond that is currently selling at…

A bond that is currently selling at $1,000 offers to pay $50 annually. What is the percentage rate of return on the bond? Multiple Choice 5 percent 10 percent 20 percent 50 percent

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter16: The Markets For Labor, Capital, And Land

Section: Chapter Questions

Problem 12P

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Question

A bond that is currently selling at $1,000 offers to pay $50 annually. What is the percentage rate of return on the bond?

Multiple Choice

5 percent
10 percent
20 percent
50 percent

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

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