A savvy Investor paid $7,500 for a 20-year $10,000 mortgage bond that had a bond interest rate of 12% per year, payable quarterly. Three years after he purchased the bond, market interest rates went down, so the bond increased in value. if the investor sold the bond for $11,500 three years after he bought It, what rate of return did the investor make per quarter and per year (nominal)? The rate of return per quarter Is9.10 The rate of return per year is %.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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A savvy investor pald S7,500 for a 20-year $10,000 mortgage bond that had a bond interest rate of 12% per year, payable quarterly.
Three years after he purchased the bond, market Interest rates went down, so the bond Increased in value. If the Investor sold the
bond for $11,500 three years after he bought It, what rate of return did the Investor make per quarter and per year (nominal)?
The rate of return per quarter is
9.10
%.
The rate of return per year is
%.
Transcribed Image Text:A savvy investor pald S7,500 for a 20-year $10,000 mortgage bond that had a bond interest rate of 12% per year, payable quarterly. Three years after he purchased the bond, market Interest rates went down, so the bond Increased in value. If the Investor sold the bond for $11,500 three years after he bought It, what rate of return did the Investor make per quarter and per year (nominal)? The rate of return per quarter is 9.10 %. The rate of return per year is %.
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