Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Suppose you bought a bond with an annual coupon rate of 8.5 percent one year ago for $908. The bond sells for $948 today. 1.)

Suppose you bought a bond with an annual coupon rate of 8.5 percent one year ago for $908. The bond sells for $948 today.

1.) Assuming a $1,000 face value, what was your total dollar return on this investment over the past year? Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.

2.) What was your total nominal rate of return on this investment over the past year? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.

3.) If the inflation rate last year was 4 percent, what was your total real rate of return on this investment?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Money Banking And Financial Markets

Authors: Stephen Cecchetti, Kermit Schoenholtz

3rd Edition

007337590X, 9780073375908

More Books

Students also viewed these Finance questions

Question

Appreciate the legal implications of employment documentation

Answered: 1 week ago