Calculation:

Holding Period Return (HPY) = (Ending Value + Income - Beginning Value) / Beginning Value

Where:

• Ending Value = $1,020 (sale price)
• Income = $30 + $30 = $60 (two coupon payments)
• Beginning Value = $910 (purchase price)

HPY = ($1,020 + $60 - $910) / $910 HPY = ($170) / $910 HPY = 0.1868 or 18.68% ≈ 18.7%

Explanation: The holding period return includes both the capital gain/loss and any income received during the holding period. In this case:

1. Capital gain = $1,020 - $910 = $110
2. Total coupon income = $30 × 2 = $60
3. Total return = $110 + $60 = $170
4. Return relative to initial investment = $170 / $910 = 18.7%

Option A (12.1%) would be incorrect if only considering capital gain or miscalculating the income. Option C (6.0%) might be a miscalculation of only one coupon payment or ignoring the capital gain.