You bought one of Bergen Manufacturing Co.’s 8 percent coupon bonds one year ago

Question

You bought one of Bergen Manufacturing Co.’s 8 percent coupon bonds one year ago for $1,059. These bonds make annual payments and mature ten years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is 7 percent.

If the inflation rate was 4.8 percent over the past year, what would be your total real return on the investment? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)

You bought one of Bergen Manufacturing Co.’s 8 percent coupon bonds one year ago for $1,059. These bonds make annual payments and mature ten years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is 7 percent.

Explanation / Answer

You bought one of Bergen Manufacturing Co.’s 8 percent coupon bonds one year ago

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