You purchased a bond at a price of $1,400. In 25 years when the bond matures, the bond will be worth $10,000. It is exactly 17 years after you purchased the bond and you can sell the bond today for $7,300. If you hold the bond until it matures, what annual rate of return will you earn from today?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 11P
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You purchased a bond at a price of $1,400. In 25 years when the bond matures, the bond will be worth $10,000. It is exactly 17 years after you
purchased the bond and you can sell the bond today for $7,300. If you hold the bond until it matures, what annual rate of return will you earn from
today?
Multiple Choice
O
3.6 percent
4.0 percent
8.2 percent
10.2 percent
4.5 percent
Transcribed Image Text:You purchased a bond at a price of $1,400. In 25 years when the bond matures, the bond will be worth $10,000. It is exactly 17 years after you purchased the bond and you can sell the bond today for $7,300. If you hold the bond until it matures, what annual rate of return will you earn from today? Multiple Choice O 3.6 percent 4.0 percent 8.2 percent 10.2 percent 4.5 percent
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