Question

You purchased a bond on January 1, 2017 for $839.67. The bond has a $1000 face value, an 8% annual coupon, and can be sold for $842.33 on December 31, 2017. What is your total dollar return for the year?

Answer 1

$82.66

Step-by-step explanation:

you purchased a bond for $839.67

coupon = $1,000 x 8% = $80

you sell the bond at the end of the year for $842.33

total dollar return on your investment = coupon + (selling price - purchase price) = $80 + ($842.33 - $839.67) = $82.66

total return in % on your investment = $82.66 / $839.67 = 9.84%