You purchased a zero-coupon bond one year ago for $279.83. The market interest rate is now 9 percent. Assume semiannual compounding. If the bond had 15 years to maturity when you originally purchased it, what was your total return for the past year? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e. g., 32.16.)

Question

Business

Trevin Bailey

14 March, 00:37

You purchased a zero-coupon bond one year ago for $279.83. The market interest rate is now 9 percent. Assume semiannual compounding. If the bond had 15 years to maturity when you originally purchased it, what was your total return for the past year? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e. g., 32.16.)

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Answers (1)

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Wong · Answer 1

5.71%

Explanation:

When you calculate you should set it semi because coupon always be calculated as half year without any other explanation.

1000 / (1.045^28) = 291.57

(291.57-275.83) / 275.83=5.71%