Question

Last year Janet purchased a \$1,000 face value corporate bond with an 11% annual coupon rate...

Last year Janet purchased a \$1,000 face value corporate bond with an 11% annual coupon rate and a 15-year maturity. At the time of the purchase, it had an expected yield to maturity of 13.96%. If Janet sold the bond today for \$1,023.28, what rate of return would she have earned for the past year? Do not round intermediate calculations. Round your answer to two decimal places. %

 a Annual Coupon Amount \$       110.00 b Present Value Annuity Factor for (15 Years,13.96%) 6.154471 c Present Value Of Annual Interest (a*b) \$       676.99 d Redemption Value \$   1,000.00 e Present Value Of (15 Years,13.96%) 0.14084 g Present Value Of Redemption Amount (d*e) \$       140.84 f Bond price(c+g) \$       817.83 Rate of return earned = (sale price - purchase price ) + coupon amount / purchase price = [(1023.28-817.83)+110]/817.83 =38.57%

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