Answer:
Realized rate of return earned on this bond is 2.61%
Explanation:
Interest Paid per year = $55
Face / Purchase Value = $804
Current Selling price = $770
Coupon rate / Interest rate per year = ( $55 / $804 ) x 100
Coupon rate / Interest rate per year = 6.84%
Return on sale of Bond = $770 - $804 = -$34
Return on sale of Bond ( Percent ) = ( -$34 / 804 ) x 100 = -4.23%
Realized rate of return = Coupon Interest rate + Return on Sale
Realized rate of return = 6.84% + ( -4.23% ) = 2.61%
