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You are considering buying a loan from a local bank with the following features: Loan principal: $10,000 Term: 10 years Stated rate: 5% (paid annually)

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You are considering buying a loan from a local bank with the following features: Loan principal: $10,000 Term: 10 years Stated rate: 5% (paid annually) Current market value: 9,500 What rate of return can you expect from this investment? Select one: a. 6.6% b.6% c.5.67% d. 6.3% The correct answer is: 5.67%

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