Question

You purchased a bond 75 days ago for $911.72. You received an interest payment of $32.00 68 days ago. Today the bond’s price is $993.39.

What is the holding period return (HPR) on the bond as of today?

Answer 1

Holding Period Return (HPR) = 12.47% (Approx)

Explanation:

Given:

Purchase price of bond = $911.72

Interest received = $32

Ending price of bond = $993.39

Find:

Holding period return (HPR) = ?

Computation:

⇒ Holding Period Return (HPR) = [Ending price of bond - Purchase price of bond + Interest received] / Purchase price of bond

⇒ Holding Period Return (HPR) = [$993.39 - $911.72 + $32] / $911.72

⇒ Holding Period Return (HPR) = [$113.67] / $911.72

⇒ Holding Period Return (HPR) = 0.12467

⇒ Holding Period Return (HPR) = 12.47% (Approx)