Answer:
25.71%
Explanation:
An investor makes a bond purchase
At the end of the first year The bond is worth $1,300
The investment paid $20 in interest
The capital gain is $250
The first step is to calculate the cost of security
= $1,300-$250
= $1,050
Therefore, the total return can be calculated as follows
Total return= capital gain+income/cost of security
= $20 + $250/$1,050
= $270/$1,050
= 0.2571×100
= 25.71%
Hence the total return is 25.71%
