To calculate the bond’s percentage return for the year, we need to determine both the capital gain and the income from the bond. Here’s the step-by-step solution:

1. Capital Gain: The capital gain is the difference between the ending and beginning prices. $\text{Capital Gain} = 1,979.47 - 1,946.05 = 33.42$

2. Coupon Payment: The bond’s coupon rate is 5.2%, so the annual coupon payment is calculated as follows: $\text{Coupon Payment} = 2,000 \times 0.052 = 104$

3. Total Dollar Return: This is the sum of the capital gain and the coupon payment. $\text{Total Dollar Return} = 33.42 + 104 = 137.42$

4. Percentage Return: To find the percentage return, divide the total dollar return by the beginning price and multiply by 100. $\text{Percentage Return} = \left(\frac{137.42}{1,946.05}\right) \times 100 \approx 7.06\%$

Answer:

The percentage return on the bond for the year is 7.06%.

Would you like further details on any step?

Here are some related questions:

1. How does the coupon rate affect the bond’s yield?
2. What is the difference between capital gain and coupon payment in bond returns?
3. How would a change in the bond’s price impact the percentage return?
4. What role does the par value play in determining the coupon payment?
5. Why is the beginning price used as the base for calculating percentage return?

Tip: When evaluating bond returns, always consider both price appreciation (or depreciation) and coupon payments for an accurate yield.