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Suppose a Midwest Telephone and Telegraph (MTT) Company bond,
maturing in 1 year, can be purchased today for $975. Assuming that the
bond is held until maturity, the investor will receive $1,000 (principal) plus
6 percent interest (that is, 0.06 3 $1,000 5 $60). Determine the percentage
holding period return on this investment.

  • Financial -

    Suppose a Midwest Telephone and Telegraph (MTT) Company bond, maturing in 1 year, can
    be purchased today for $975. Assuming that the bond is held until maturity, the investor will
    receive $1,000 (principal) plus 6 percent interest (that is, 0.06 3 $1,000 5 $60). Determine the
    percentage holding period return on this investment.

  • Financial -

    Percentage Holding Period Return = [($1,000 - $975 + $60)/$975] x 100% = 8.717% (8.72% rounded).

  • Financial -

    Six months ago, you purchased a tract of land in an area where a new
    industrial park was rumored to be planned. This land cost you $110,000, and
    the seller offered you an interest-free loan for 70 percent of the land cost.
    Today, the industrial park project was formally announced, and an attorney
    for the developer has just offered you $190,000 for your land. If you accept
    this offer, what will be your holding period return on this investment?

  • Financial -

    8.Six months ago, you purchased a tract of land in an area where a new industrial park was rumored to be planned. This land cost you $110,000, and the seller offered you an interest-free loan for 70 percent of the land cost. Today, the industrial park project was formally announced, and an attorney for the developer has just offered you $190,000 for your land. If you accept this offer

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