FINANCE

posted by .

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.

  • FINANCE -

    What you want is called the Yield To Maturity (YTM). In one year, the net gain will be 25 + 60 = $85 on an investment of $975. that is 8.72% YTM annual interest

Respond to this Question

First Name
School Subject
Your Answer

Similar Questions

  1. Math

    The Garraty company has two bond issues outstanding. Both bonds pa $100 annual interest plus $1,000 at maturity. Bond L has a maturity of 15 years and Bond S a maturity of 1 year. A). What will be the value of each of these bonds when …
  2. Economics - Bonds

    The Garraty company has two bond issues outstanding. Both bonds pa $100 annual interest plus $1,000 at maturity. Bond L has a maturity of 15 years and Bond S a maturity of 1 year. A). What will be the value of each of these bonds when …
  3. bond valuation

    Bond valuation The Garraty Company has two bond issues outstanding. Both bonds pay $100 annual interest plus $1,000 at maturity. Bondf L has a maturity of 15 years, and Bond S a maturity of 1 year. a. What will the value of each of …
  4. bond valuation

    Bond valuation The Garraty Company has two bond issues outstanding. Both bonds pay $100 annual interest plus $1,000 at maturity. Bondf L has a maturity of 15 years, and Bond S a maturity of 1 year. a. What will the value of each of …
  5. 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 …
  6. Finance

    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 …
  7. accounting

    4. Suppose a Midwest telephone company and telegraph MTT company bond maturing in one year can be purchased today for $975 assuming that that the bond is held until maturity the investor will receive $1000 principal plus 6 percent …
  8. Finance

    An investor purchases a 10-year U.S. government bond for $800. The bond's coupon rate is 10 percent and,?
  9. Finance

    2. You are now considering adding a corporate bond to your investment portfolio. The bond was issued last year to have 10 years to maturity (so it has 9 years remaining to maturity from today) The bond has an 8% coupon, and was sold …
  10. FINANCE

    10. Bond prices and interest rate An 8 percent coupon bond with 15 years to maturity is priced to offer a 9 percent yield to maturity. You believe that in one year, the yield to maturity will be 6.5 percent. What is the change in price …

More Similar Questions