Two year ago, you purchased a 6% coupon bond with 10 years to maturity and had a yield to maturity of 4%. This bond pays interest semi-annually. If you sell this bond today (two years later) and its yield to maturity is now 6%, what would be your holding period return on this transaction?

Two year ago, you purchased a 6% coupon bond with 10 years to maturity and had a yield to maturity of 4%. This bond pays interest semi-annually. If you sell this bond today (two years later) and its yield to maturity is now 6%, what would be your holding period return on this transaction?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

Two year ago, you purchased a 6% coupon bond with 10 years to maturity and had a
yield to maturity of 4%. This bond pays interest semi-annually. If you sell this bond
today (two years later) and its yield to maturity is now 6%, what would be your
holding period return on this transaction?

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