A bond has a face value of $1,000, is redeemable in eight years, and pays interest of

Question:

A bond has a of $1,000, is redeemable in eight years, and pays interest of $100 at the end of each of the eight years. If the bond can be purchased for $981, what is the rate of return if the bond is held until maturity?
(a) 10.65%
(b) 12.65%
(c) 10.35%
(d) 11.65%
Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...