Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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
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. For full marks you must either show all your calculations in the space provided below or submit them to the drop box provided in the Assignments area: a. What was your total dollar return on the bond over the past year? (2 marks) b. What was your total nominal return on the bond over the past year? (2 marks) c. If the inflation rate last year was 5%, what was your total real rate of return on the bond? (2 marks) d. Compute the total percentage return on the ABC share. (2 marks) e. What was the dividend yield on the ABC share. (2 marks) f. What was the capital gain yield on the ABC share. (2 marks)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started