What is the expected rate of return of the 20-year, $1,000 par value bond paying 6.5 percent interest annually if its market price is $875?

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  • 1 month ago

    Using Excel RATE function

    Expected return =RATE(20,6.5%*1000,-875,1000) = 7.75%

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  • Don G
    Lv 7
    1 month ago

    PV 875, FV 1,000, N 20, PMT 65 computes to a Rate of return of 7.75%. 

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