Adam buys a two-year bond with a $1000 face value and a 10% coupon rate for $1000 today. If one year later the market interest rate increases by 6% and Adam sells the bond, then his rate of return on this investment is _______%

Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter5: Investment Decisions: Look Ahead And Reason Back
Section: Chapter Questions
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Adam buys a two-year bond with a $1000 face value and a 10% coupon rate for $1000 today. If one year later the market interest rate increases by 6% and Adam sells the bond, then his rate of return on this investment is _______% (round to one decimal place, negative if it is a loss)

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