On April 15, you purchased a 5-year bond at an asking price of 101:04. The bond...

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On April 15, you purchased a 5-year bond at an asking price of 101:04. The bond...

On April 15, you purchased a 5-year bond at an asking price of 101:04. The bond had a 10% coupon paid semi-annually every Jan 15 and July 15. Suppose that you held the bond for only one and a half years and sold it at $1010. What's your holding period return?

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Answer 1

Answer #1

10 -101.04 | 0.5 10.104 1 1.5 10.104 1010 929.168 2.5 10.104 3 3.5 10.104 | 4.5 10.104

The above image shows the cash flows for the bond.

after one and a half years the profit will be 929.168.

it is calculated as -101.04+10.104+10.104+1010 = 929.168, where 1010 is the selling price for the bond.

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Answer 2

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On April 15, you purchased a 5-year bond at an asking price of 101:04. The bond...

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