Question: The problem is: Tom bought 5 bonds with $1,000 face value for $800 5 years ago. The coupon rate is 8%. Tom sold the bond

The problem is:

Tom bought 5 bonds with $1,000 face value for $800 5 years ago. The coupon rate is 8%. Tom sold the bond for $750 today. What is Toms total percentage return?

What I did to solve everything is:

Income: 8%*1,000*5=$400

Capital Gain: (750-800) *5 = -$250

Total Dollar return: 400 250 = $150

Percentage return: ?????

Percentage return = dollar return/ beginning balance

so I think it is 150/(5*?)= then I get answer but Idk missing number

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

For the three probability distributions shown, rank each distribution from lowest to highest in terms of the sample size required for the distribution of the sample mean to be approximately normally...

Tom bought 5 bonds with $1,000 face value for $1,100 5 years ago. The coupon rate is 8%. Tom sold the bond for $900 today. What is Toms total percentage return?

Please answer the following questions: 1. Cindy bought 20 shares of a stock for $70 per share. She received dividends of $2 per share. The stock is now selling for $60 per share. What is the...

i am taking Cooperate finance which is FIN222 can help me to answer.. ? Tutorial 1 Topic 1 Chapter 1 4. What are the main advantages and disadvantages of organising a firm as a corporation? 6. You...

Please solve and show the steps as to how you obtained the answer. 1 You have a portfolio made up of equal amounts of two different types of bonds: 2-year, 12% annual coupon bonds, with a duration of...

Problem 6-1 Question Help Consider a 20-year Government of Canada bond with a face value of $1,000 that has a coupon rate of 5.1%, with semi-annual payments. a. What is the coupon payment for this...

1. Consider a 5-year $1000 face value bond which has a 10% coupon rate. Currently, it is thought that interest rates will remain constant at 3% for the full five periods. Suddenly, there is 'news'...

You are considering a new product launch. The project will cost $1,192,500, have a ve-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 230 units per...

Its micro... explain every part 8. Overhaul of a production line generates the following incremental cash inflows over the line's 5-year remaining life. C1 C2 C3 CA C's Cash inflow ($ million) +1.5...

A. You have just purchased a home and taken out a $430,000 mortgage. The mortgage has a 30-year term with monthly payments and an APR of 5.92%. How much will you pay in interest, and how much will...

Project Details John and Jane Doe are newlyweds with executive track careers at ACME Gadget Company. In five years, the Does would like to have a family, envisioning two young children, Jack and...

Five different repeating units are found in the polymer obtained by cationic polymerization of 4-methyl-1-pentene. Identify these repeating units.

The following table contains prices and dividends for a stock. All prices are after the dividend has been paid. If you bought the stock on January 1 and sold it on December 31, what is your...

Major Smith, who has been called to active duty, is leasing a car for his wile. The two conditions that must be satisfied in order for the loasing company fo repossess the car are that A . the lease...

A company issues 1,050 shares of its common stock for $33,600 cash. Prepare journal entries to record this event under each of the following separate situations.