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You purchased a $1,000 bond with a coupon rate of 6 % on January 1, 2021 for $910. On the same date you also purchased
You purchased a $1,000 bond with a coupon rate of 6 % on January 1, 2021 for $910. On the same date you also purchased a share of ABC Inc for $85. During 2021 you received a dividend of $2.35 on the ABC share. It is now January 1, 2022 and the bond is selling for $980 and the ABC share is worth $90.
Required, round all answers to two decimal points. Show all calculations in the space provided below or submit your calculations to the Drop Box in the Assignments area:
- 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 4 %, 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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