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28 May, 00:24

A bond had a price of $1,946.61 at the beginning of the year and a price of $1,982.79 at the end of the year. The bond's par value is $2,000 and its coupon rate is 6 percent. What was the percentage return on the bond for the year?

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  1. 28 May, 02:24
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    The percentage return on the bond is %8.02

    Explanation:

    To calculate a return of a bond we take value of bond at maturity and add the coupon payments as they are capital gains / subtract if they are loses and subtract the original price of the bond also divide by original price

    Price at the beginning $1,946.61

    Price at the end $1,982.79

    Coupon 2000*6 * = $120

    return = 1982.79 - 1946.61 + 120 / 1946.61

    =0.0802/%8.02
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