Two years ago, the price of a bond was 1,071.64 dollars, and one year ago, the price

Question:

Two years ago, the price of a bond was 1,071.64 dollars, and one year ago, the price of the bond was 1,133.25 dollars. Over the past year, the bond paid a total of 70.69 dollars in coupon payments, which were just paid. If the bond is currently priced at 1,116.78 dollars then what was the rate of return for the bond over the past year (from 1 year ago to today)? The par value of the bond is 1,000 dollars. Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.
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...
Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Question Posted: