Suppose you bought a 12 percent coupon bond one year ago for ($975.) The bond sells for

Question:

Suppose you bought a 12 percent coupon bond one year ago for $$975.$ The bond sells for $$925$ 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 4 percent, what was your total real rate of return on this investment?

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