Recycler Battery Corporation (RBC) sold zero coupon bonds for $214.50 each 5 years ago. RBC's zeros were issued with a 20-year maturity and a $1,000 par value. The bonds is redeemable at a premium of 7% above their accumulated value on the call date, ten years after the issue date. What average rate of return does an investor who buys the bonds today hope to gain if they sell for $239.39 in the market? a. 15.7% b. 12.4% c. 10.0% d. 9.5% e. 8.0%
Recycler Battery Corporation (RBC) sold zero coupon bonds for $214.50 each 5 years ago. RBC's zeros were issued with a 20-year maturity and a $1,000 par value. The bonds is redeemable at a premium of 7% above their accumulated value on the call date, ten years after the issue date. What average rate of return does an investor who buys the bonds today hope to gain if they sell for $239.39 in the market? a. 15.7% b. 12.4% c. 10.0% d. 9.5% e. 8.0%
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
Section: Chapter Questions
Problem 1PS
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7A-10
Recycler Battery Corporation (RBC) sold zero coupon bonds for $214.50 each 5 years ago. RBC's zeros were issued with a 20-year maturity and a $1,000 par value. The bonds is redeemable at a premium of 7% above their accumulated value on the call date, ten years after the issue date. What average
a. 15.7%
b. 12.4%
c. 10.0%
d. 9.5%
e. 8.0%
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