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Lecture 17

FIN 302 Lecture 17: Chapter 12.1Premium


Department
Finance
Course Code
FIN 302
Professor
Qin Lei
Lecture
17

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Example 1:
Dollar return
Total dollar return
= income from investment+ capital gain or loss due to the price change
Bond bought at $950 from 1 year ago, you had received from two coupon payment
with $30 each, you end up sell the bond for $975 today.
Total dollar return?
From coupon payment
Income
2 x $30 = $60
Capital Gain
975-950 = $25
Total Dollar return
$60 + $25 = $85
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