In early January 2010, you purchased $37,000 worth of somehigh-grade corporate bonds. The bonds carried a coupon of 6 1/8% and mature in 2024. You paid 93.879

when you bought the bonds. Over the five years from 2010 through 2014, the bonds were priced in the market asfollows:

Coupon payments were made on schedule throughout the5-year period.

a. Find the annual holding period returns for 2010 through 2014 (See Chapter 5 for the HPRformula.)

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 themarket? Explain.

a. The holding period return for 2010 ______%. (Round to two decimalplaces.)

The holding period return for 2011 is ________%. (Round to two decimalplaces.)

The holding period return for 2012 is ________%. (Round to two decimalplaces.)

The holding period return for 2013 is ________%. (Round to two decimalplaces.)

The holding period return for 2014 is ________%. (Round to two decimalplaces.)

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 themarket? Explain.(Select the best choicebelow.)

Thehigh-grade corporate bond investment has outperformed the market. The average rate of return for the investment is 11.69% versus the average market rate of 5.83%.

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 11.69

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 93.879 101.414 7.30%

2011 101.414 102.802 11.72%

2012 102.802 104.828 -6.89%

2013 104.828 113.341 7.90%

2014 113.341 123.763 9.11% .