Suppose you bought a bond with a coupon rate of 5.2 percent one year ago for $1,015.

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Suppose you bought a bond with a coupon rate of 5.2 percent one year ago for $1,015. The bond sells for $1,032 today. The bond pays annual coupons.

a. Assuming a $1,000 face value, what was your total dollar return on this investment over the past year?

b. What was your total nominal rate of return on this investment over the past year?

c. If the inflation rate last year was 3.2 percent, what was your total real rate of return on this investment?

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Corporate Finance Core Principles And Applications

ISBN: 9781260571127

6th Edition

Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan

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Question Posted: Nov 13, 2020 04:44 AM

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Suppose you bought a bond with a coupon rate of 5.2 percent one year ago for $1,015.

Question:

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a The total dollar return is the change in price plus the coupon payment so Total ...View the full answer

Corporate Finance Core Principles And Applications

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