Refer back to the Series EE savings bonds we discussed at the very beginning of the chapter.

Question:

a. Assuming you purchased a $50 face value bond, what is the exact rate of return you would earn if you held the bond for 20 years until it doubled in value?

b. If you purchased a $50 face value bond in early 2017 at the then current interest rate of .10 percent per year, how much would the bond be worth in 2027?

c. In 2027, instead of cashing the bond in for its then current value, you decide to hold the bond until it doubles in face value in 2037. What rate of return will you earn over the last 10 years?

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...

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