# Explain the relationship between risk and return

## Risk and Return Problems and Questions

Complete the following problem sets from Chapter 7 in Microsoft® Excel®. Use one spreadsheet tab for each problem:

• 7-21 Compute Bond Price Compute the price of a 3.8 percent coupon bond with 15 years left to maturity and a market interest rate of 6.8 percent. (Assume interest payments are semiannual.) Is this a discount or premium bond? (LG7-4)
• 7-27 Yield to Maturity A 5.65 percent coupon bond with 18 years left to maturity is offered for sale at \$1,035.25. What yield to maturity is the bond offering? (Assume interest payments are semiannual.) (LG7-6)

Answer the following questions in a separate tab of your spreadsheet document. Answers should be brief, concise, and to the point.

• Explain the relationship between risk and return
• Identify an example of risk and return.
• Explain which is more risky bonds or common stocks.
• Explain how understanding risk and return will help you in future business ventures.

Click the Assignment Files tab to submit your Microsoft® Excel® document I need 2 pages.