SHOW WORK PLEASE A. Suppose you bought a bond with an annual coupon rate of 6.5

Question

SHOW WORK PLEASE

A. Suppose you bought a bond with an annual coupon rate of 6.5 percent one year ago for $1,032. The bond sells for $1,020 today. (1). Assuming a $1,000 face value, what was your total dollar return on this investment over the past year? (2). What was your total nominal rate of return on this investment over the past year? (3). If the inflation rate last year was 3 percent, what was your total real rate of return on this investment? Input area: Coupon paid 65 Initial price Ending price1,020 $ 1,032 Inflation rate 3% Output area: $ a. Dollar return b. Nominal return c. Real return 53.00 5.14% 2.14%

Explanation / Answer

dollar return=(1020-1032+1000*6.5%)=53

nominal return %=(1020-1032+1000*6.5%)/1032=5.14%

real return using simple way=5.14%-3%=2.14%

real return using detailed method=((1+5.14%)/(1+3%))-1=2.08%

the above is the answer

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

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