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Unformatted text preview: Total received payments: $435 For ROI: profit x 100/ investment x years invested (435 - 500) x 100 / (500 x 3.5) = -6500/ 1750 = -3.71% realized return on investment b. The firm does far better than expected and bondholders receive all of the promised interest and principal payments. What is the realized return on your investment? If the firm did not default and payed out all interest and principle: Interest revenue: 1,000 x .095 x 11 = 1,045 Principle: 1,000 Total received: 2,045 Investment: 500 ROI: (2045 - 500) x 100 / (500 x 11) = 154,500 / 5,500 = 28.09% realized return on investment....
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This note was uploaded on 03/23/2012 for the course ACCT 306 taught by Professor Mikewoodard during the Spring '12 term at DeVry Houston.
- Spring '12