Jenny bought a bond for $985 months a year ago. She receives $90 coupon interest during the year and sold the bond for $1,100 today. What is her realized return

Jenny

Realized return = $205

Explanation:

a) Data and Calculations:

Cost of bond = $985

Coupon interest = $90

Sale of bond = $1,100

Realized return = Proceeds from sale of bond plus Received coupon interest minus the Cost of the bond

= $1,100 + $90 - $985

= $205

b) The Realized Return is the actual return which Jenny earned during the holding period for her investment.  It may include dividends, interest payments, and other cash distributions. The term "realized return" can be specifically be applied to a bond sold before its maturity date or a dividend-paying security.

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