What is the rate of return for an investor who pays 105827 f

What is the rate of return for an investor who pays $1,058.27 for a three-year bond with a 15% coupon and sells the bond one year later for $1,037.78?

Solution

investor paid = $1,058.27

15% coupon applied on $1,058.27

so 15% = $158.74

difference between $1,058.27 and $1,037.78 = 20.49

now

Rate of Return = (amount deducted by coupon - difference)/ investor paid

= (158.74 - 20.49) / $1,058.27

= 0.1306

i.e.., 13.06 %