# Return on bonds

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1. What is the return on a 5 percent coupon bond that initially sells for $1,000 and sells for $900 next year?

2. If a $12,000 coupon bond has a coupon rate of 8 percent, then the coupon payment every year is

3. The current yield on a $5,000, 8 percent coupon bond selling for $4,000 is

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#### Solution Preview

1. What is the return on a 5 percent coupon bond that initially sells for $1,000 and sells for $900 next year?

Selling price= $900

Coupon payment = $50 =5%*1000

Amount realized= $950 =900+50

Initial investment= $1,000

Therefore return on ...

#### Solution Summary

The solution calculates returns on investment in bonds, coupon payment every year and the current yield.

$2.49