E Connect PUSINESSSTATISTmcs Question 2 (of 100 A portfolio manager invested $2,

Question

E Connect PUSINESSSTATISTmcs Question 2 (of 100 A portfolio manager invested $2,300,000 in bonds in 2007. In one year the market value of the bonds dropped to $2.280,000. The interest payments during the year totaled $92,000. a. What was the manager's total rate of retum for the y (Round your answer to 2 decimal places.) Total rate of retum b. What was the manager's real rate of return it the inflation rate d the year was 2.3%? (Round your answer to 2 decimal places) Real rate of return Hints References eBook & Resources Hint 1 O Type here to search Save & Exit

Explanation / Answer

Given,

investment=2300000

interest=92000

final value=2280000

net return=2280000-2300000+92000

=72000

A.a) Total rate of return=72000/2300000

Total rate of return =3.13%

A.b) Inflation rate=2.3%

real rate of return=72000/1.023

Real rate of return =70381

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