# Holding period return

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?

© BrainMass Inc. brainmass.com June 3, 2020, 10:32 pm ad1c9bdddfhttps://brainmass.com/business/business-math/holding-period-return-236282

#### Solution Preview

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.