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Suppose you bought a bond with an annual coupon rate of 4.2 percent one year ago for $900. The bond sells for $950 today.

Suppose you bought a bond with an annual coupon rate of 4.2 percent one year ago for $900. The bond sells for $950 today.

 

a.

Assuming a $1,000 face value, what was your total dollar return on this investment over the past year?

 

  Total dollar return $   

 

b.

What was your total nominal rate of return on this investment over the past year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

 

  Nominal rate of return  %  

 

c.

If the inflation rate last year was 2.5 percent, what was your total real rate of return on this investment?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Top Answer

Capital gain = 950 - 900 = 50 Coupon = 42 Total dollar... View the full answer

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Other Answers

a. 95 918 - 893 = 25 capital gains and you also earned 7% interest of the... View the full answer

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