Question

You bought a bond five years ago for $804 per bond. The bond is now selling for $770. It also paid $55 in interest per year, which you reinvested in the bond. Calculate the realized rate of return earned on this bond. (Do not round intermediate calculations. Round your percentage answer to 2 decimal places. (e.g., 32.16))

Answer 1

the rate of return is 6.09%

Step-by-step explanation:

the computation of the realized rate of return earned on this bond is shown below:

Given that

NPER is 5

PMT is $55

PV is $804

FV is $770

The formula is shown below:

=RATE(NPER,PMT,-PV,FV,TYPE)

After applying the above formula, the rate of return is 6.09%