Narender purchased a bond with face value of ₹1,000 for ₹950. The coupon rate on the bond is 12%. If he sells the bond one year later for ₹960. Compute the holding period return for Narender.
CS Executive · Capital Markets & Securities Laws · PYQS · June 2018
Narender purchased a bond with face value of ₹1,000 for ₹950. The coupon rate on the bond is 12%. If he sells the bond one year later for ₹960. Compute the holding period return for Narender.
Answer & Explanation:
Computation of the holding period return for Narender Holding period return for Bond = (Sale Price - Purchase Price) / Purchase Price + Interest / Purchase Price = (₹960 - ₹950) / ₹950 + ₹120 / ₹950 = 13.68%
Topics: Bond Valuation