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Semenov [28]
3 years ago
7

You buy a seven-year bond that has a 6.50% current yield and a 6.50% coupon (paid annually). In one year, promised yields to mat

urity have risen to 7.50%. What is your holding-period return
Business
1 answer:
Harlamova29_29 [7]3 years ago
7 0

The current yield and annual coupon rate of 6.50% show that the bond price was at par a year ago.

The givens are FV=1,000, n= 6, PMT = 65.00, and i= 7.50 so with this we know that the selling price this year is $953.06.

So the holding period return is $1,000+$953.06+$65.00

$1,000=0.0181=1.81%

Hope this helps, now you know the answer and how to do it. HAVE A BLESSED AND WONDERFUL DAY! As well as a great rest of Black History Month! :-)  

- Cutiepatutie ☺❀❤

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