Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Suppose you bought a bond with an annual coupon rate of 8.1 percent one year ago for $904. The bond sells for $940 today. a.

Suppose you bought a bond with an annual coupon rate of 8.1 percent one year ago for $904. The bond sells for $940 today.

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

Total dollar return $

b. What was your total nominal 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.g., 32.16.)

Total nominal rate of return %

c. If the inflation rate last year was 4.1 percent, 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.g., 32.16.)

Total real rate of return %

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Students also viewed these Finance questions