You buy a government bond for $134 and sell it for $153 one year later. What was your rate of return (interest rate) measured in percentage terms?

Respuesta :

Based on the fact that you bought the government bond and sold it a year later, your rate of return in percentage terms is 14.2%.

What is your rate of return?

Your rate of return on the government bond you purchased in one year based on the buying price of $134 and the selling price of $153 can be found as:

= (Selling price - Buying price) / Buying price x 100%

Solving for the rate of return gives:

= (153 - 134) / 134 x 100%

= 19/ 134 x 100%

= 0.141791 x 100%

= 14.2%

In conclusion, your rate of return is 14.2%.

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