|
                Â
K = N |
|
Bond Price =∑ [(Annual Coupon)/(1 + YTM)^k]   Â
+Â Â Par value/(1 + YTM)^N |
|
                 Â
k=1 |
|
|
|
                Â
K =21 |
|
Bond Price =∑ [(7.1*1000/100)/(1 +
5.2/100)^k]Â Â Â Â +Â Â 1000/(1 +
5.2/100)^21 |
|
                 Â
k=1 |
|
|
|
Bond Price = 1239.37 = beginning price |
|
                Â
K = N |
|
Bond Price =∑ [(Annual Coupon)/(1 + YTM)^k]   Â
+Â Â Par value/(1 + YTM)^N |
|
                 Â
k=1 |
|
|
|
                Â
K =20 |
|
Bond Price =∑ [(7.1*1000/100)/(1 +
5.7/100)^k]Â Â Â Â +Â Â 1000/(1 +
5.7/100)^20 |
|
                 Â
k=1 |
|
|
|
Bond Price = 1164.56 = ending price |
total return of the bond in dollar= eniding
price+coupon-beginning price
=1164.56+71-1239.37
=-3.81
total return of the bond in percent=(total return of the bond in
dollar/beginning price)
=-3.81/1239.37
=-0.31%
