Rate of return on a bond
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How do I find N (number of periods)for the bond? I think this is why I don't understand how to work out the problem. Please answer in xls and explain how to do this.
It is January 2005, and you observe the following price quote:
BK Corp. 5 1/2s28Dec Close 92 3/4
1. Suppose interest rates were to fall by 1.5% over the next year. What would be the rate of return from buying the bond today, holding it for one year, and selling it at its new market price?
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Solution Summary
The solution explains how to calculate the holding period return on a bond.
Solution Preview
In this case, since we are interested in only 1 year, we do not need the N. Otherwise, N is the multiplication of years to maturity and the coupoun payment frequency. ...
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