## Question

###### 4) You purchase a $1000 par, zero coupon bond today for $225, and it matures in...

4) You purchase a $1000 par, zero coupon bond today for $225, and it matures in 11 years. a) What rate of return will you earn on the bond, if you hold it to maturity? b) If you sell the bond in 3 years at a price of $342, what rate of return would you earn?

## Answers

4)

*Please rate thumbs upa) Rate of return 14.52% =(1000/225)^(1/11)-1 b) Rate of return 14.98% =(342/225)^(1/3)-1

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