Suppose the government decides to issue a new savings bond that is guaranteed todouble in value if you hold it for 16 years. Assume you purchase a bond that costs $75.a. What is the exact rate of return you would earn if you held the bond for 16 years untilb. If you purchased the bond for $75 in 2017 at the then current interest rate of.21c. In 2025, instead of cashing in the bond for its then current value, you decide to holdit doubled in value? (Do not round intermediate calculations and enter your answeras a percent rounded to 2 decimal places, e.g., 32.16.)percent year, how much would the bond be worth in 2025? (Do not roundintermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)the bond until it doubles in face value in 2033. What annual rate of return will youearn over the last 8 years? (Do not round intermediate calculations and enter youranswer as a percent rounded to 2 decimal places,e.g..32.16.)a. Rate of returnb. Value of bondc. Rate of return4.43%76.269.4 %

Step1: Calculating the value of rate of return on the investment in the bond. We have,The…

Answered: Suppose the government decides to issue…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 9P

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