Harley bought a one year $1000 treasury bond. He paid $950 for the treasury bond. What is his rate of return?
0.053%
5%
5.3%
53%
To calculate the rate of return for Harley, we need to determine the gain or profit he made on the investment.
The gain can be calculated by subtracting the purchase price of the bond from the face value of the bond:
Gain = Face Value - Purchase Price
= $1000 - $950
= $50
Next, we can calculate the rate of return by dividing the gain by the purchase price and multiplying by 100:
Rate of Return = (Gain / Purchase Price) * 100
= ($50 / $950) * 100
≈ 5.26%
Therefore, Harley's rate of return is approximately 5.26%.
To calculate the rate of return, we need to determine the difference between the purchase price and the final value of the bond, and then express that difference as a percentage of the initial investment.
In this case, Harley bought a one-year $1000 treasury bond for $950. To find the rate of return, we subtract the purchase price from the maturity value and divide the result by the purchase price:
Rate of return = [(Maturity value - Purchase price) / Purchase price] x 100
The maturity value of the bond is $1000, and the purchase price is $950:
Rate of return = [(1000 - 950) / 950] x 100
Rate of return = (50 / 950) x 100
Rate of return = 0.0526 x 100
Rate of return = 5.26%
Therefore, Harley's rate of return is 5.26%.