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

Question

Quizplus · Accepted Answer

FV = 1,000, PMT = 100, n = 9, i = 8, PV = 1,124.94; FV = 1000, PMT = 100, n = 8, i = 8, PV = 1,114.93; HPR = (1,114.93 - 1,124.94 + 100)/1,124.94 = 8%.

You Purchased an Annual Interest Coupon Bond One Year Ago