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You purchased a $1,000 bond with a coupon rate of 8 % on January 1, 2021 for $910. On the same date you also purchased
You purchased a $1,000 bond with a coupon rate of 8 % on January 1, 2021 for $910. On the same date you also purchased a share of ABC Inc for $81. During 2021 you received a dividend of $2.50 on the ABC share. It is now January 1, 2022 and the bond is selling for $950 and the ABC share is worth $89.
Required, round all answers to two decimal points
- What was your total dollar return on the bond over the past year? (2 marks)
- What was your total nominal return on the bond over the past year? (2 marks)
- If the inflation rate last year was 5%, what was your total real rate of return on the bond? (2 marks)
- Compute the total percentage return on the ABC share. (2 marks)
- What was the dividend yield on the ABC share. (2 marks)
- What was the capital gain yield on the ABC share. (2 marks)
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