7. Problem (5 parts) You are investing in bonds to have lower risk in your portfolio. The price today is $926. This bond pays semiannual coupons, but has an annual coupon rate of 7,4%. The face value is $1,000. You bought it last year for $897 To compare it to other investments, a. What was your total rate of return on this investment over the past year? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e-9., 12.34.) 2. Total nominal rate of retum b. What is the formula you used to calculate the return (part a)? (Write the number of the formula you used from your formula sheet) b. Formula number for (a) c. What is the annual amount of the coupon? (Do not round intermediate calculations and enter your answer as a dollar value rounded to 2 decimal places, e.... 12.34.) C. Coupon Amount d. Answer (a) is the Nominal or Stated rate. If the Inflation rate last year was 4.4%, what was your total real rate of return on this Investment? (Do not round Intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e... 12.34.) b. What is the formula you used to calculate the return (part a)? (Write the number of the formula you used from your formula sheet) b. Formula number for (a) c. What is the annual amount of the coupon? (Do not round Intermediate calculations and enter your answer as a dollar value rounded to 2 decimal places, eg.. 12.34.) C. Coupon Amount d. Answer (a) is the Nominal or Stated rate. If the Inflation rate last year was 4.4%, what was your total real rate of return on this investment? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.9., 12.34.) d. Total teal rate of return e. What is the formula you used to calculate the real return (part d)? (Write the number of the formula you used from your formula sheet) - Formula number for (d) CFFA = OCF - NCS - ANWC OCF - EBIT +D-T OCF = Profit (1-T)+ (D)(T) Formula Sheet NSCF SV-(SV - BV) (T) BV straight-line Years 6 Sensitivity Variable ANPV Avariable Sensitivity Variable MOC A variable 9 10 CF 8 NPV = 0 CF (1 + IRR) IRR-Rates (NPV X Ratched - Rate (NPVL - NPVH (1 + R) Dividend Yield: DPR 13 11 DA Po" R (R-0) 17 Price/share Price/share 16 PE Earnings PS- Sales 18 S/5 Sales shares outstanding EPS Earnings (Revenue--Cost) shares outstanding 20 EPS- Price" Benchmark PE ratio x EPS, Pricey Benchmark P-S ratio x Sales Share 21 22 25 27 23 - (1) PVADPMT (1+r) pvp-PMT PV 26 PVADEPMT ((1+r)" 24 A-PMT - Cara ya PMT + 28 29 Current Yield Annual Coupon Price (Po) 30 PBond- (YTM YTU (1+R) - (1+rX1+h) (TYTU 32 FV-PV(1+r)' in PV- 1 FV (1+r) in (1 33 34 35
