Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. using the bond below, calculate your annual holdin

Using the bond below, calculate your annual holding period yield (on a bond equivalent basis). Holding period...

Free

60.2K

Verified Solution

Question

Finance

Using the bond below, calculate your annual holding period yield(on a bond equivalent basis).

Holding period yield (HPY)
Last coupon date pre-purchase7/15/2016
First coupon date post-purchase1/15/2017
Purchase price (clean)90.000
Purchase (settlement) date10/1/2016
Sale price (clean)92.000
Sale date2/10/2022
Coupon rate5.00%
CouponSemi-annual
Convention30/360
  • 3.096%
  • 5.888%
  • 6.192%
  • 6.246%
  • 6.288%

Answer & Explanation Solved by verified expert
3.9 Ratings (392 Votes)

Oct 1.2016 Purchase
15-Jan-17 1st coupon 31+30+31+15= 107
Jul-17 1 5 yrs.
Jan-18 2
Jul-18 3
Jan-19 4
Jul-19 5
Jan-20 6
Jul-20 7
Jan-21 8
Jul-21 9
Jan-22 10
Feb 10,2022 16+10= 26
133
Assuming a $ 100 Face value bond,
1.Purchase price (without accrued interest) -90
Coupon Interest receipts for
Oct.1 2016 to Jan 15,2017(105 days) 100*5%*107/360 1.46
Jan 15, 2017--Jan 22 2022(10 semiannual coupon periods) 100*5%/2*10= 25.00
Jan 16,2022--Feb 10, 2022(26 days) 100*5%*26/360 0.36
2.Total interest reciepts 26.82
3.Sale price (without accrued interest) 92
4.Net holding period gain(1+2+3) 28.82
Gain % (28.82/90)------------ (4/1) 32.02%
for a total of 5 yrs. & (133/360) days (ie. 5.36944 yrs.)
Holding period Yield/ Year 5.96%
Nearest Option ANSWER: 5.89%
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Win/Loss and With/Without Joe: Joe plays basketball for the Wildcats and missed some of the season...

Statistics
Q

List four key characteristics of the adaptive immune response

Medical Sciences
Q

The devices designed for the purpose of addressing security in the network generate a number of...

Programming
Q

The Quest For Perpetual Motion It has been a tenet of physics that it is not...

Physics
Q

Consider an object whose initial displacement and velocity are both equal to zero with respect to...

Physics
Q

During the power stroke in a four-stroke automobile engine, the pis-ton is forced down as the...

Physics
Q

What is the probability that either event will occur First find the probability of event...

Algebra
Q

What is the monthly payment on a 30-year mortgage of $200,000 at 8% interest per...

Algebra
Q

The Jordans are shopping for a new vehicle They are pricing a 4 door sedan...

Algebra
Q

1. Reiver village is a growing community somewhere in the great state of Iowa and...

Accounting
Q

what is the best definition of a money market

Accounting
Q

Assignment 10-1B Case Study: Bright White Paper Company Bright White Paper Company manufactures various types...

Accounting