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26 September, 05:57

You buy a government bond for $128 and sell it for $155 one year later. What was your rate of return (interest rate) measured in percentage terms? Round to two decimal places. Do not enter a % sign.

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  1. 26 September, 09:32
    0
    21.09

    Explanation:

    The rate of return or the rate of interest is computed as:

    Rate of return = Selling price of bond - Purchase price of bond / Purchase price of bond * 100

    where

    Selling price of bond is $155

    Purchase price of bond is $128

    So, putting the values above as:

    Rate of return = $155 - $128 / $128 * 100

    Rate of return = $27 / $128 * 100

    Rate of return = 0.2109 * 100

    Rate of return = 21.09
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