Fight Finance

Courses  Tags  Random  All  Recent  Scores

Scores
keithphw$5,691.61
Visitor$1,190.00
Gisele$936.78
doctor$860.00
Visitor$800.00
Visitor$770.00
aurora$629.43
Visitor$580.00
Visitor$568.33
Visitor$500.87
Visitor$500.00
Visitor$497.24
Visitor$477.00
Visitor$470.00
Visitor$468.78
tomtomtom$453.98
Visitor$440.00
royal ne...$430.00
Visitor$419.43
Visitor$400.00
 

Question 552  bond pricing, income and capital returns

An investor bought a 10 year 2.5% pa fixed coupon government bond priced at par. The face value is $100. Coupons are paid semi-annually and the next one is in 6 months.

Six months later, just after the coupon at that time was paid, yields suddenly and unexpectedly fell to 2% pa. Note that all yields above are given as APR's compounding semi-annually.

What was the bond investors' historical total return over that first 6 month period, given as an effective semi-annual rate?




Copyright © 2014 Keith Woodward