In early January 2010, you purchased $34,000 worth of some high-grade corporate bonds. The bonds carried a coupon of 7 4/8% and mature in 2024. You paid 93.426 when you bought the bonds. Over the five years from 2010 through 2014, the bonds were priced in the market as follows: Coupon payments were made on schedule throughout the 5-year period.

A. Find the annual holding period returns for 2010 through 2014. (See Chapter 5 for the HPR formula.)

b. Use the average return information in the given table to evaluate the investment performance of this bond. How do you think it stacks up against the market? Explain.

a. The holding period return for 2010 is __%. (Round to two decimal places.)

The holding period return for 2011 is __%. (Round to two decimal places.)

The holding period return for 2012 is __%. (Round to two decimal places.)

The holding period return for 2013 is __%. (Round to two decimal places.)

The holding period return for 2014 is __%. (Round to two decimal places.)

b. Use the average return information in the given table to evaluate the investment performance of this bond. How do you think it stacks up against the market? Explain.(Select the best choice below.)

• The market has outperformed the corporate bond investment. The average rate of return for the investment is 5.83% versus the average market rate of 13.34%.
• The high-grade corporate bond investment has outperformed the market. The average rate of return for the investment is 13.34% versus the average market rate of 5.83%.

	Quoted Prices (% of $1,000 par value)
Year	Beginning of the Year	End of the Year	Average Holding Period Return on High-Grade Corporate Bonds
2010	93.426	100.778	7.30%
2011	100.778	101.975	11.72%
2012	101.975	105.931	-6.89%
2013	105.931	112.666	7.90%
2014	112.666	124.899	9.11%