you buy a nine-year maturity bond that has a 8.50% current yield and a 8.50% coupon (paid annually). in one year, promised yields to maturity have risen to 9.50%. what is your holding-period return?

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you buy a nine-year maturity bond that has a 8.50% current yield and a 8.50% coupon (paid annually). in one year, promised yields to maturity have risen to 9.50%. what is your holding-period return?

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Smecloudbird18go Smecloudbird18go · Answer 1

3.07% is your holding-period return. By dividing the annual coupon payment by the bond's current market value, the current yield of a bond is determined.

The annual interest rate return set when the bond is issued that does not fluctuate throughout the course of the bond's life is known as the coupon yield, sometimes known as the coupon rate. Bonds' current yield is calculated by dividing their coupon yield by their current market value. The current yield will vary if the market price changes. The following equation can be used to determine yield in its most basic form: yield = coupon amount/price. The yield fluctuates along with the price.

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