Suppose the government decides to issue a new savings bond that is guaranteed to double...
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Finance
Suppose the government decides to issue a new savings bond that is guaranteed to double in value if you hold it for 16 years. Assume you purchase a bond that costs $25.
a.
What is the exact rate of return you would earn if you held the bond for 16 years until it doubled in value? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
b.
If you purchased the bond for $25 in 2017 at the then current interest rate of .11 percent year, how much would the bond be worth in 2025? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
c.
In 2025, instead of cashing in the bond for its then current value, you decide to hold the bond until it doubles in face value in 2033. What annual rate of return will you earn over the last 8 years? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
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