You purchased an annual interest coupon bond one year ago with six years remaining to maturity at the time of purchase.The coupon interest rate is 10% and par value is $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 bond's yield to maturity had changed to 7%, your annual total rate of return on holding the bond for that year would have been

Question

Quizplus · Accepted Answer

FV = 1000, PMT = 100, n = 6, i = 8, PV = 1092.46; FV = 1,000, PMT = 100, n = 5, i = 7, PV = 1,123.01; HPR = (1,123.01 - 1,092.46 + 100)/1,092.46 = 11.95%.

You Purchased an Annual Interest Coupon Bond One Year Ago