Question

you purchased s coupon bond at a price of 1059. the coupon rate for the bond is 5% with face value of 1000. you sold the bond at 1066.13 one year later. how much us one year holding period return on the bond ?

a-6%

b-5.39%

c-7%

d-6.26

e-8.52%

Answer 1

Answer is b. 5.39%

Return = (selling price- purchase price) + dividend                                

   purchase price                                   

                                                         

             = (1066.13- 1059) + 50                             

                          1059                                   

                                                         

            =  0.05394712                                 

                                                         

= 5.39%