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Sagot :
Answer:
5.00
Explanation:
The rate of return for the investor can be determined using a holding period rate of return bearing in mind that the investor would incur a cash outflow of $1,054.47 whereas the investor would receive $1,037.19 and an annual coupon of 7% of the face value
holding period return=(selling price+annual coupon-purchase price)/purchase price
annual coupon=7%*$1000
annual coupon=$70.00
holding period return=($1,037.19+$70.00-$1,054.47)/$1,054.47
holding period return=5.00%
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