Making the assumption of no compounding interest, suppose you purchase a perpetuity bond from Lateralus Inc. for $ 4 , 000 with

Question

2 years ago

4

Making the assumption of no compounding interest, suppose you purchase a perpetuity bond from Lateralus Inc. for $ 4 , 000 with

an annual coupon rate of 3 % . Specify all answers to the nearest dollar, and assume a discount rate equal to that of the current interest rate. What is the yearly return on your $ 4 , 000 investment

Business

1 answer:

denpristay [2] · Answer 1 · 2023-08-13T16:46:17+03:00

Answer:

$120

Explanation:

Data provided as per the given question below:-

Investment = $4,000

Coupon rate in percentage = 3%

The computation of yearly return is shown below:-

Yearly return = Investment × Coupon rate in percentage

= $4,000 × 3%

= $120

Therefore for computing the yearly return we simply investment with coupon rate in percentage.