Question

Five years ago, Rock Steady Corp issued a semiannual coupon bond with seven years until maturity. This bond was originally issued at par with a $1,000 face value. The coupon rate on the bond is 8%. Today, the yield-to-maturity (YTM) is 10%. Assume an investor bought the bond at the time it was issued and sold it today. What is the holding period return for the five year period of investment? Please provide the formula you used, and show your work.

Answer #1

Purchase price of the bond 5 years ago = $1000 (purchased at par)

There are 2 years remaining for maturity

Hence there are 4 coupons remaining and face-value at maturity

We discount all these cash-flows with the YTM to get the bond value today

Semi-annual coupon = 1000*8%/2 = $40

Bond price today = 40/(1.05^1) + 40/(1.05^2) +40/(1.05^3) +1040/(1.05^4)

Bond price today = $964.54

Holding period return = (Total income + (Selling price-Purchase price))/Purchase price

Total income = Coupon payments for 5 years = 5*8%*1000 =$400

Holding period return for 5 year period of investment =
(400+964.54-1000)/1000 = 0.36454 = **36.454%**

Five years ago, Rock Steady Corp issued a semiannual coupon bond
with seven years until maturity. This bond was originally issued at
par with a $1,000 face value.
The coupon rate on the bond is 8%. Today, the yield-to-maturity
(YTM) is 10%.
Assume an investor bought the bond at the time it was issued and
sold it today. What is the holding period return for the five year
period of investment?
0.3389
0.3422
0.3654
0.3838

Five years ago, Rock Steady Corp issued a semiannual coupon bond
with seven years until maturity. This bond was originally issued at
par with a $1,000 face value.
The coupon rate on the bond is 8%. Today, the yield-to-maturity
(YTM) is 10%.
Assume an investor bought the bond at the time it was issued and
sold it today. What is the holding period return for the five year
period of investment? please provide step by step solution!

A semiannual coupon bond was issued 5 years ago today with a
maturity of 20 years. Its coupon rate is 8% and par value $1,000.
What is the current (today) bond price if the market interest is
6%?
a. $1,085.30
b. $1,000
c. $1,196
d. $1,231.15

A semiannual coupon bond was issued 5
years ago today with a maturity of 20
years. Its coupon rate is 8% and par value $1,000. What is the
current (today) bond price if the market interest
is 6%?
Group of answer choices
$1,196
$1,000
$1,085.30
$1,231.15

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percent semi-annual coupon. The bond currently sells for
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bond can be called in six years for redemption price of $1,075,
what is the bond’s yield to call (YTC)?

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the bond had seven years remaining until maturity. The bond has a
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of $1,000. Coupon payments are made semiannually.
a. What was the yield to maturity when you purchased the bond
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b. Assume the yield to maturity today is the same as the yield
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immediately after the receipt of today's coupon if the YTM has
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