Hunter bought a bond with an 8% coupon rate for $1,100 and sold it one year later for $1,150. His holding period return was

Name: Hunter bought a bond with an 8% coupon rate for $1,100 and sold it one year later for $1,150. His holding period return was
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The holding period return is calculated as (Coupon Payment + Selling Price - Purchase Price) / Purchase Price. Here, the coupon payment is 8% of $1,000 (assuming $1,000 face value), which is $80. The return is ($80 + $1,150 - $1,100) / $1,100 = 11.8%.

Hunter Bought a Bond with an 8% Coupon Rate for $1,100