A mortgage bond issued by Automation Engineering is for sale for $8200. The bond has a face value of $10,000 with a coupon rate of 8% per year, payable annually. What rate of return will be realized if the purchaser holds the bond to maturity 5 years from now?

What will be an ideal response?


0 = -8200 + 10,000(0.08)(P/A,i*,5) + 10,000(P/F,i*,5)
Solve by trial and error or IRR function
i* = 13.1% per year (spreadsheet)

Trades & Technology

You might also like to view...

Output driver modules are capable of controlling up to ____________________ separate outputs

Fill in the blank(s) with the appropriate word(s).

Trades & Technology

Which winding of a transformer is connected to the load?

a. Mutual b. Positive c. Secondary d. Primary

Trades & Technology

What motors are the simplest, most rugged, and most common?

A) Mechanical motors B) Induction motors C) Self-propelled motors D) Intrinsic motors

Trades & Technology

When driving in fog, snow, or rain, you should use your:

a. running lights b. high-beam headlights c. low-beam headlights

Trades & Technology