What is the rate of return interest rate on a discount bond

What is the rate of return (interest rate) on a discount bond that you paid $925 for and hold until maturity given that its face value is $1000?

1)

2)

3)

4)

1)

7.5%

2)

8.1%

3)

108%

4)

0.08%

Solution:-

Answer is Option (2) = 8.1%

It is simply equal to 1000-925/925 (100) =8.1%

What is the rate of return (interest rate) on a discount bond that you paid $925 for and hold until maturity given that its face value is $1000? 1) 2) 3) 4) 1)

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