Nine years ago the Templeton Company issued 26-year bonds with an 11% annual coupon rate at their $1,000 par value. The bonds had a 9% call premium, with 5 years of call protection. Today Templeton called the bonds. Compute the realized rate of return for an investor who purchased the bonds when they were issued and held them until they were called. Round your answer to two decimal places.

Respuesta :

Answer:

11.62%

Explanation:

Note: see the attached excel file for how the realized rate of return is estimated.

Face value = $1,000  

Years completed = 9

Coupon rate = 11%

Coupon amount ($) = 110  

Call premium = 9%

Call price = 1,090

Realized rate of return = 11.62%

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