Question

you purchased a zero-coupon bond one year ago for $277.83. 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.)

Answer 1

The total return for the past year is 259.91%.

Step-by-step explanation:

The total return for the past year can be calculated by finding the difference between the face value and the price you paid for the bond. The face value of the bond is $1000. The price you paid for the bond was $277.83. So the difference is $1000 - $277.83 = $722.17.

To calculate the total return as a percentage, divide the difference by the price you paid and multiply by 100.

Total return = ($722.17 / $277.83) * 100 = 259.91%.