Question

. You bought a bond for $950 1 year ago. You have received a coupon of...

. You bought a bond for $950 1 year ago. You have received a coupon of $60. You can sell the bond for $977 today. What is your total dollar return?

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Answer #1

Solution :

The formula for calculating the total dollar return on an investment in a bond is

= [ Sale price per bond + Coupon received per bond – Purchase price per bond ]

As per the information given in the question we have

Sale price per bond = $ 977 ; Coupon received per bond = $ 60 ; Purchase price per bond = $ 950 ;

Applying the above information in the formula we have the total dollar return as

= $ 977 + $ 60 - $ 950

= $ 87

Thus the total dollar return on the bond = $ 87

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