Janice V. bought a 5% $1000 twenty-year bond for $925. She received a semiannual dividend for 8 years, then sold it immediately after the 16th dividend for $800. What rate of return did she make (a) per semiannual period, and (b) per year (nominal)?
What will be an ideal response?
(a) Dividend = 1000(0.05)/2 = $25 per 6 months
0 = -925 + 25(P/A,i*,16) + 800(P/F,i*,16)
Solve by trial and error or IRR function
i* = 1.98% per 6 months (spreadsheet)
(b) Nominal rate = 1.98*2 = 3.96% per year
You might also like to view...
Describe the correct procedure for starting up the heat exchanger system.
What will be an ideal response?
Why does a starter motor use multiple armature segments?
A. To increase maximum rpm. B. To reduce current draw under load. C. To produce uniform constant torque. D. To maximize heat transfer from the rotor.
A minimum set of requirements for plumbing installations in a municipality, city, county, or state is a(n)
A. plumbing license B. permit C. code D. inspection
¿Cuál de los siguientes métodos de verificación de alarmas requiere dos detectores en cada espacio monitoreado?
a. Secuencia positiva de alarma b. Muestreo de colector c. Tipo reinicio y nuevo muestreo d. De zonificación cruzada