Realized return is known as the holding period yield

Assignment Help Financial Management

Reference no: EM131580821

The YTM on a bond is the interest rate you earn on your investment if interest rates don’t change. If you actually sell the bond before it matures, your realized return is known as the holding period yield (HPY).

a. Suppose that today you buy a bond with an annual coupon of 8 percent for $1,030. The bond has 17 years to maturity. What rate of return do you expect to earn on your investment? Assume a par value of $1,000. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Expected rate of return %

b1. Two years from now, the YTM on your bond has declined by 1 percent, and you decide to sell. What price will your bond sell for? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Bond price $

b2. What is the HPY on your investment? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

HPY %

Reference no: EM131580821

Questions Cloud

Present value of the tax benefits from depreciation : Estimate the present value of the tax benefits from depreciation.

Complete a set of cash flow t-accounts : Investments costing $38,000 were purchased for cash. Complete a set of cash flow T-accounts using the indirect method of computing cash flows from operations

What is the cost of preferred equity for firm : JJ firm issues a constant amount of preferred dividends at an annual value of $3. What is the cost of preferred equity for JJ Firm?

Microsoft word document concerning the following situation : Read the case study attached and report in a Microsoft Word document concerning the following situation:

Realized return is known as the holding period yield : If you actually sell the bond before it matures, your realized return is known as the holding period yield (HPY).

Biases that have interfered with your career : Do you feel that you have been treated differently in your work place because you are a woman?

Analyze the ethical considerations that apply : Analyze the ethical considerations that apply. Describe the organization's current hiring needs and projected hiring needs for the coming year.

The ftc and product advertising : ?The power of advertising is in its persuasive influence, and this influence can take several different forms. Using your textbook or Internet

Forms of integrated marketing communications : Choose Mahindra & Mahindra as an organizational brand and discuss how this firm can uses various forms of integrated marketing communications in communicating

User Account

All Pages