Question

A- You bought a bond five years ago for $779 per bond. The bond is now selling for $760. It also paid $50 in interest per year, which you reinvested in the bond. Calculate the realized rate of return earned on this bond. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

	Realized rate of return    %

B- You have just been offered a bond for $863.90. The coupon rate is 7 percent payable annually, and the yield to maturity on new issues with the same degree of risk are 9 percent. You want to know how many more interest payments you will receive, but the party selling the bond cannot remember. If the par value is $1,000, how many interest payments remain? (Do not round intermediate calculations. Round your answer to the nearest whole number.)

	Remaining number of interest payments years

Answer 1

The solution to the given question is provided below:

1.

=RATE(5,50,-779,760)=5.99%

2.

=NPER(9%,7%*1000,-863.90,1000)=11