Question text

Last year, you purchased a $1,000 par value bond with a 7.5% annual coupon and a 20-year maturity. At the time of the purchase, it had an expected YTM of 7%. After receiving the coupon, you sold the bond today for $1040. What is your return rate in one year?

Select one:

a. 3.37%

b. 5.89%

c. 2.09%

d. 10.64%

e. 12.75%