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Suppose that today you buy a bond with an annual coupon rate of 8 percent for $1,100. The bond has 15 years to maturity. What rate of return do you expect to earn on your investment

Respuesta :

Answer:

6.91%

Explanation:

In this question we use the RATE formula that is shown on the attachment below:

Given that,  

Present value = $1,050

Assuming figure - Future value or Face value = $1,000  

PMT = 1,000 × 8% ÷ 2

NPER = 15 years

The formula is shown below:  

= Rate(NPER;PMT;-PV;FV;type)  

The present value come in negative  

So, after solving this, the rate of return is 6.91%

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