Problem:
Suppose that on January 1, 2016, you purchased a coupon bond with the following characteristics:
- Face value: $1,000
- Coupon rate: 8 3/8
- Current yield: 7.5%
- Maturity date: 2020
Requirement:
If the bond is selling for $850 on January 1, 2017, then what was your rate of return on this bond during the holding period of the calendar year 2016? You must show your work for credit.