Bond valuation-holding period return for the one-year period

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Reference no: EM131983059

Bond Valuation

Suppose that last year you purchased a 10 year coupon bond. The face value of the coupon bond was $1,000 with a coupon rate of 5.4%. At the time you purchased the bond, the yield to maturity was 2%. Suppose that the yield to maturity changed to 3% immediately after you purchased the bond. If you were to sell the bond today what would be your holding period return for the one-year period? Assume the coupon payments are paid semi-annually. [Hint: When calculating the price of the bond today consider how many years are left until the bond matures.]

Reference no: EM131983059

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