Question 1 options)

A Treasury bond that you own at the beginning of the year is worth $1,055. During the year, it pays $35 in interest payments and ends the year valued at $1,065. Your dollar return was ________ and your percent return was _______.

Dollar return = $45

Percent return = 4.27%

Step-by-step explanation

Dollar return is computed using the equation given below:

Dollar return = Interest + (Ending value - Beginning value) 

                       = $35 + ($1,065 - $1,055) 

                       = $35 + $10

                       = $45

Percent return is computed using the equation given below:

Percent return = Dollar return / Beginning value

                          = $45 / $1,055

                          = 0.0427 or 4.27%