Suppose an 8% coupon, ?1000 face value, 30-year bond that makes semiannual coupon payments is selling ?1276.76. What average rate of return would be earned by an investor purchasing this bond at this price?© BrainMass Inc. brainmass.com June 3, 2020, 10:21 pm ad1c9bdddf
Please refer attached file for calculating Return by using Excel. Following is the methodology to calculate average return without using MS Excel.
Mathematically price of a bond is defined as summation of all PV's of all future payments
No. of periods=60
Sum of all PVs of future ...
The solution describes the methodology to calculate average return earned on an investment in a coupon paying bond by using functions in MS Excel and without using MS Excel.