Problem
In January 2003, an investor bought a convertible debenture bond Issued by the XLA Corporation. The bond cost $1000 and paid $60 per year interest in annual payments on December 31. Under the convertible feature of the bond, it could be converted into 20 shares of common stock by tendering the bond, together with $400 cash. The next business day after the investor received the December 31, 2005, interest payment, he submitted the bond together with $400 to the XLA Corporation. In return, he received the 20 shares of common stock. The common stock paid no dividends. On December 31, 2007, the investor sold the stock for $1740, terminating his 5-year investment in XLA Corporation. What rate of return did he receive?