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    annual rate of bonds

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    In the section on the yield to call, a bond pays annual interest of $80 and matures after ten years. The bond is valued at $1,147 if the comparable rate is 6 percent and the bond is held to maturity. If, however, an investor expects the bond to be called for $1,050 after five years, the value of the bond would be $1,122. (See footnote 5.) Investor A expects the bond to be called and investor B expects the bond not to be called. Investor A sells the bond to B for $1,122.

    What is the annual return earned by B if the bond is not called?

    Why is this yield greater than the 6 percent earned on comparable securities?

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    https://brainmass.com/business/accounting/annual-rate-bonds-492062

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    Annual return can be computed using the following ...

    Solution Summary

    The annual rate of bonds is examined.

    $2.19

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