You purchased an annual interest coupon bond one year ago that had nine years remaining to maturity at that time.The coupon interest rate was 10%, and the par value was $1,000.At the time you purchased the bond, the yield to maturity was 8%.If you sold the bond after receiving the first interest payment and the yield to maturity continued to be 8%, your annual total rate of return on holding the bond for that year would have been

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The total rate of return on holding the bond for that year would have been 8.00%. This is because the yield to maturity (YTM) remained constant at 8% from the time of purchase to the time of sale, indicating that the bond's price did not change due to interest rate movements. The investor would have received a 10% coupon payment on the par value ($100 on a $1,000 bond) and sold the bond for the same price they paid, as the YTM remained at 8%. Therefore, the total return comes from the coupon payment, equating to an 8% annual return when considering the bond's price remained stable due to the constant YTM.

You Purchased an Annual Interest Coupon Bond One Year Ago