Four years ago, Guard Co sold a 20 year bond issue with a 7 annual coupon rate and a 9 call premium Today, Guard Co called the bonds The bonds originally were sold at their face value of $1,000 Compute the realized rate of return for investors who purchased the bonds when they were issued and who s...

Four years ago, Guard Co. sold a 20-year bond issue with a 7% annual coupon rate and

Question:

Four years ago, Guard Co. sold a 20-year bond issue with a 7% annual rate and a 9% call premium. Today, Guard Co. called the bonds. The bonds originally were sold at their of $1,000. Compute the realized rate of return for investors who purchased the bonds when they were issued and who surrender them today in exchange for the call price?
Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...