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    Holding period return

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    The return an investor earns on a bond over a period of time is known as the holding period return, defined as interest income plus or minus the change in the bond's price, all , all divided by the beginning bond price.

    A. What is the holding period return on a bond with a par value of $1,000 and a coupon rate of 6 percent of its price at the beginning of the year was $1,050 and its price at the end was $940? Assume interest is paid annually.

    B. Can you give two reasons the price of the bond might have fallen over the year?

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    Solution:

    A. What is the holding period return on a bond with a par value of $1,000 and a coupon rate of 6 percent of its price at the beginning of the year was $1,050 and its price at the end ...

    Solution Summary

    Solution describes the steps for calculating holding period return for a bond. It also lists two possible reasons for fall of bond price.

    $2.19

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