Suppose you bought a bond with an annual coupon of 7 percent one year ago for $1,010.
Question:
Suppose you bought a bond with an annual coupon of 7 percent one year ago for $1,010. The bond sells for $985 today.
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 percent, what was your total real rate of return on this investment?
CouponA 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...
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The total dollar return is the increase in price plus the coupon payment so Total ...View the full answer
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Related Book For 
Fundamentals of Corporate Finance
ISBN: 978-1260153590
12th edition
Authors: Stephen M. Ross, Randolph W Westerfield, Robert R. Dockson, Bradford D Jordan
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