A corporate bond that you own at the beginning of the year i

A corporate bond that you own at the beginning of the year is worth $925. During the year, it pays $55 in interest payments and ends the year valued at $915.

What was your dollar return and percent return? (Round your percent return answer to 2 decimal places.)

Solution

Dollar return = Ending value + interest payment - beginning value

Dollar return = 915 + 55 - 925

Dollar return = $45

Percent return = Dollar return / Beginning value

Percent return = 45 / 925

Percent return = 0.048649 or 4.86%