Suppose you bought a 13 percent coupon bond one year ago for $1,050. The bond se

Question

Suppose you bought a 13 percent coupon bond one year ago for $1,050. The bond sells for $1,085 today. Requirement 1: Assuming a $1,000 face value, what was your total dollar return on this investment over the past year? $_______________________________________ Requirement 2: What was your total nominal rate of return on this investment over the past year? _____________________________% Requirement 3: If the inflation rate last year was 9 percent, what was your total real rate of return on this investment? (Do not round intermediate calculations.) __________________________________%

Explanation / Answer

Coupan payment=1000*13%=130

Price increase=1085-1050=35

Requirement 1 130+35=165

Requirement 2

165/1050=15.71%

Requirement 3

Real rate of return =15.71%-9%=6.71%

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.