Answer:
0.61%
Explanation:
For computing the holding period return we first have to determine the present value which is shown in the attachment
Future value = $1,000
Rate of interest = 7%
NPER = 8 years - 1 year = 7 year
PMT = $1,000 × 6% = $60
The formula is shown below:
= -PV(Rate;NPER;PMT;FV;type)
So, after solving this, the present value is $946.11
Now the holding period return is
= (Present value - Par Bond value + Coupon) ÷ (Par value)
= ($946.11 - $1,000 + $60) ÷ ($1,000)
= 0.61%