Assume that the yield-to-maturity at December 31, 20X10, and December 31, 20X11, is still 10 percent. Also assume that an investor decides to purchase these bonds in the open market at December 31, 20X10, for $736,740, and then sell these bonds one year later (e.g., at December 31, 20X11). What is the dollar return (e.g., income/gains) that the investor will earn during 20X11 from this investment? How much of this return is attributed to interest and how much to change in price of the bond?

Answer rating: 100% (QA)

To calculate the dollar return earned during 20X11 from the investment in bonds we need to consider ... View the full answer