=

Calculation of Leveraged Bond Portfolio Returns Market Value of Bonds = $5,000,000 % Equity in Bonds = 40% $2,000,000 % Borrowed Funds = 60% $3,000,000 Annual Cost to Borrow Funds = = 0.046 30 Day Cost to Borrow Funds = 0.003833 Return on Funds Invested = 0.50% Return on Equity Bonds = 0.50% Return on Borrowed Bonds = 0.1167% Return on Bond Portfolio = 0.6750%