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Show that it the yield to maturity increases, then holding-period retum is less than that initial yield. For example, suppose in Example 10.11 that by the end of the first year, the bond's yield to maturity is 8.5%. Find the one-year holding-period return and compare it to the bond's initial 8% yield to maturity. Yield to Maturity versus Holding-Period Return Consider a 30 -year bond paying an annual coupon of $80 and selling at par value of $1,000. The bond's initial yield to maturity is 8%. If the yield remains at 8% over the year, the bond price will remain at par, so the holding-period return also will be 8%. But if the yield falls below 8%, the bond price will increase, Suppose the yield falls and the price increases to $1,050. Then the holding-period return is greater than 8% : Holdino-periodreturn=$1,000$80+($1,050$1,000)=.13,or13%