What rate of return will an investor earn

问题单项选择题

What rate of return will an investor earn if they buy a 20-year, 10 percent annual coupon bond for $900 They plan on selling this bond at the end of five years for $951. Calculate the rate of return and the current yield at the end of five years. Rate of return Current yield （）①A. 12.0% 10.51% ②B. 9.4% 11.00% ③C. 12.0% 11.00%

A. ①

B. ②

C. ③

答案

参考答案：A

解析：

Realized (horizon) yield=rate of return based on reinvestment rate on selling price at the end of the holding period horizon. PV=900; FV=951; n=5; PMT=100; CPF I=12 percent Current Yield=annual coupon payment/bond price CY=100/$951=0.1051 or 10.51 percent