What is the hpy on investment

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Reference no: EM133072344

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 11 percent for $1,200. The bond has 19 years to maturity. What rate of return do you expect to earn on your investment?

b) 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?

c) What is the HPY on your investment?

Reference no: EM133072344

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