Question
On 1st April 2019, George purchased some corporate bonds that had just been issued by Kanzan Cherries Ltd. At issue, the bonds had a 10-year
On 1st April 2019, George purchased some corporate bonds that had just been issued by Kanzan Cherries Ltd. At issue, the bonds had a 10-year term to maturity. The face value per bond is $1,000; the coupon rate is 4% p.a., with coupons being paid annually. At 1st April 2019, the bonds were priced in the market a market rate of interest (i.e. yield to maturity) of 6% p.a. One year later, on 1st April 2020, George sold the bonds, having received the annual coupon payment the day before. On 1st April 2020 the bonds were being priced at a yield-to-maturity of 8%. Georges holding period return was
Select one:
a. -7.3%
b. -8.3%
c. -2.3%
d. -4.3%
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