Suppose you bought a 6 percent coupon bond one year ago for $950

jagguarpaw January 11, 2017 0 Comments

Suppose you bought a 6 percent coupon bond one year ago for $950

Question: Suppose you bought a 6 percent coupon bond one yea…

Suppose you bought a 6 percent coupon bond one year ago for $950. The bond sells for $995 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 5 percent, what was your total real rate of return on this investment? (Do not round intermediate calculations.)