Question

Making the assumption of no compounding interest, suppose you purchase a perpetuity bond from Sense/Net Corporation for $4,000 with an annual coupon rate of 3% . Specify all answers to the nearest dollar, and assume a discount rate equal to that of the current interest rate. What is the yearly return on your $4,000 investment?

Answer 1

$120

Step-by-step explanation:

Data provided as per the given question below:-

Investment = $4,000

Coupon rate in percentage = 3%

The computation of yearly return is shown below:-

Yearly return = Investment × Coupon rate in percentage

= $4,000 × 3%

= $120

Therefore for computing the yearly return we simply investment with coupon rate in percentage.