You bought one of Mastadon Manufacturing Co.s 5.9 percent coupon bonds one year ago for $1,015. These

Question:

You bought one of Mastadon Manufacturing Co.’s 5.9 percent coupon bonds one year ago for $1,015. These bonds make annual payments, mature eight years from now, and have a par value of $1,000. Suppose you decide to sell your bonds today, when the required return on the bonds is 5.1 percent. If the inflation rate was 2.9 percent over the past year, what would be your total real return on the investment?

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...