Suppose you bought a 9 percent coupon bond one year ago for, Ask an Expert

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Suppose you bought a 9 percent coupon bond one year ago for $880. The bond sells for $950 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 rate of return on this investment over the past year (in percent)?

Requirement 3:

If the inflation rate last year was 9 percent, what was your total "real" rate of return on this investment? Assume that the answer for "Requirement 2" above is in "nominal" terms, and then use the Fisher Effect Formula (see Bond chapter) to find the "real" rate of return. (Do not round intermediate calculations.)

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92075339

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