Ahmed invested BD980 buying bond with a face value of BD1000. The bond pays a 4% coupon payment that will mature in one year.

What is the bonds coupon rate?

What is the annual coupon payment on this bond?

What is the bond current yield?

Explain what does the current yield of a bond measures

What is the bond yield to maturity?

What does the bond yield to maturity measure?

Now let us consider that the bond is a three which Ahmed paid for BD980 and sold at face value after two years. What is the total return of this bond over the two years?

If we assume that the rate of inflation next year will be 8% , what will be the rate of return on this bond?