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bond's total return calculation
Mock 2010 PM:
A beginning price of $103, a 5% semiannual coupon, an expected price at the end of one year of $102.5, and an annual reinvestment rate of 2 percent.
What is the one-year expected total return?
My answer is:
(102.5+2.5+2.5x1.01)/103 - 1 = 4.39%
The guideline answer is:
102.5+2.5+2.5x1.01 = 107.525
(107.525/103)^0.5 - 1 = 0.02173
2.17% x 2 = 4.35%
Do we have to use BEY for total return? |
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发表于 2011-7-13 13:53
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