What nominal and effective annual rate of return

Reference no: EM13699001

A well-known industrial firm has issued $1,000 bonds with a 4% coupon interest rate paid semi annually. The bonds mature 20 years from now. From the financial pages of your newspaper you learn that the bonds may be purchased for $715 each ($710 for the bond plus a $5 sales commission). What nominal and effective annual rate of return would you receive if you purchased the bond now and held it to maturity 20 years from now?

Reference no: EM13699001

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