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#### On February 2, 2016, an investor held some Province of Ontario stripped coupons in a self-administered RRSP at ScotiaMcLeod, an investment dealer

###### Finance

On February 2, 2016, an investor held some Province of Ontario stripped coupons in a self-administered RRSP at ScotiaMcLeod, an investment dealer. Each coupon represented a promise to pay \$100 at the maturity date on February 2, 2022, but the investor would receive nothing until then. The value of the coupon showed as \$84.73 on the investor's screen. This means that the investor was giving up \$84.73 on February 2, 2016, in exchange for \$100 to be received just less than six years later.

a. Based upon the \$84.73 price, what rate was the yield on the Province of Ontario bond? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Rate of return           %

b. Suppose that on February 2, 2017, the security's price was \$89.00. If an investor had purchased it for \$84.73 a year earlier and sold it on this day, what annual rate of return would she have earned? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Annual rate of return           %

c. If an investor had purchased the security at the market price of \$89.00 on February 2, 2017, and held it until it matured, what annual rate of return would she have earned? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Annual rate of return

## 2.94 USD

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