Find the annual holding period returns for 2014

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In early January 2014, you purchased $100,000 worth of some high grade corporate bonds. The bonds carried a coupon of 6% and mature in 2027. You paid a price of 102.625 when you bought the bonds. Over the five years from 2014 through 2018, the bonds were priced in the market as follows:

Quoted Prices (% of $1,000 par value)  Year Beginning of the Year End of the year
2014 102.625 110.125
2015 110.125 108.750
2016 108.750 106.375
2017 106.375 106.750
2018 106.750 101.250

Annual coupon payments were made on schedule throughout the five year period.

-Find the annual holding period returns for 2014 through 2018. ( See Chapter 4 for the HPR formula.)

-Use the return information in Table 10.1 to evaluate the investment performance of this bond. How do you think it stacks up against the market? Explain.

Reference no: EM132724615

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