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Homework answers / question archive / Four years ago, Nancy Stills bought six-year, 5
Four years ago, Nancy Stills bought six-year, 5.1 percent coupon bonds issued by the Blossom Corp. for $948.84. If she sells these bonds at the current price of $896.32, what will be her realized yield on the bonds? Assume similar coupon-paying bonds make annual coupon payments. (Round intermediate calculations to 5 decimal places, e.g. 1.25145 and final answer to 2 decimal places, e.g. 15.25%.)
Realised rate of return __________%
Computation of Realized Rate of Return using Rate Function in Excel:
=rate(nper,pmt,-pv,fv)
Here,
Rate = Realized Rate of Return = ?
Nper = 4 Years
PMT = $1,000*5.1% = $51
PV = Purchase Price = $948.84
FV = Sales Price = $896.32
Substituting the values in formula:
=rate(4,51,-948.84,896.32)
Rate or Realized Rate of Return = 4.07%
