To compute the holding period return on a bond investment, the investor should divide the purchase price of the bond into
A) any increase or decrease in the bond's price.
B) the annual coupon payment.
C) the bond's yield to maturity.
D) coupon payments received plus or minus any change in the bond's price.

Question

Quizplus · Accepted Answer

The holding period return on a bond investment is calculated by taking into account the coupon payments received during the holding period plus or minus any change in the bond's price, relative to the purchase price. This approach captures both income (from coupons) and capital gains or losses (from price changes).

To Compute the Holding Period Return on a Bond Investment