You purchased an annual interest coupon bond one year ago that had six 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

Question

Quizplus · Accepted Answer

FV = 1,000, PMT = 100, n = 6, i = 8, PV = 1,092.46; FV = 1000, PMT = 100, n = 5, i = 8, PV = 1,079.85; HPR = (1,079.85 - 1,092.46 + 100)/1,092.46 = 8%.

You Purchased an Annual Interest Coupon Bond One Year Ago