You purchased a 10-year,6% coupon bond (the bond makes semi-annual payments)last year based upon a discount rate of 6%.One year later the discount rate has fallen to 5.5%.What is your total return on the bond?

Question

Quizplus · Accepted Answer

Price at purchase: 1,000
Price on year later: 30PVIFA(19,5.5%)+ 1,000PVIF(19,5.5%)= 1,035.12
Cash received during the year: 2 ´ 30 = 60
Total return: (35.12 + 60)/ 1,000 = .09512

You Purchased a 10-Year,6% Coupon Bond (The Bond Makes Semi-Annual