The total dollar return, nominal rate of return , and real rate of return Introduction: The term return refers to a profit or gain made on an investment that is usually expressed in terms of percentage or dollars. The percentage total return shows the overall performance and efficiency of the amount invested. The nominal rate of return refers to a return from an investment before considering the inflation rate, taxes, and other external expenses. The real rate of return refers to an annual return earned from an investment. This is regulated for fluctuations in price as a result of inflation rate and other external effects.

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Answer 1

Question

Chapter 10, Problem 4QP

(a)

Summary Introduction

To determine: The total dollar return, nominal rate of return, and real rate of return

Introduction:

The term return refers to a profit or gain made on an investment that is usually expressed in terms of percentage or dollars. The percentage total return shows the overall performance and efficiency of the amount invested.

The nominal rate of return refers to a return from an investment before considering the inflation rate, taxes, and other external expenses.

The real rate of return refers to an annual return earned from an investment. This is regulated for fluctuations in price as a result of inflation rate and other external effects.

(b)

Summary Introduction

To determine: The total dollar return, nominal rate of return, and real rate of return

Introduction:

The term return refers to a profit or gain made on an investment that is usually expressed in terms of percentage or dollars. The percentage total return shows the overall performance and efficiency of the amount invested.

The nominal rate of return refers to a return from an investment before considering the inflation rate, taxes, and other external expenses.

The real rate of return refers to an annual return earned from an investment. This is regulated for fluctuations in price as a result of inflation rate and other external effects.

(c)

Summary Introduction

To determine: The total dollar return, nominal rate of return, and real rate of return

Introduction:

The term return refers to a profit or gain made on an investment that is usually expressed in terms of percentage or dollars. The percentage total return shows the overall performance and efficiency of the amount invested.

The nominal rate of return refers to a return from an investment before considering the inflation rate, taxes, and other external expenses.

The real rate of return refers to an annual return earned from an investment. This is regulated for fluctuations in price as a result of inflation rate and other external effects.

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Please include the excel formula Suppose you bought a bond with an annual coupon of 6 percent one year ago for $1,010. The bond sells for $1,025 today.a. Assuming a $1,000 face value, what was your total dollar return on this investment over the past year?b. What was your total nominal rate of return on this investment over the past year?c. If the inflation rate last year was 3 percent, what was your total real rate of return on this investment? Input area: Coupon rate 6% Initial price $1,010 Ending price $1,025 Par value $1,000 Inflation rate 3% (Use cells A6 to B10 from the given information to complete this question.) Output area: Coupon paid Dollar return Nominal return Real return

Suppose you bought a bond with an annual coupon rate of 4 percent one year ago for $800. The bond sells for $850 today. a. Assuming a $1,000 face value, what was your total dollar return on this investment over the past year? b. What was your total nominal rate of return on this investment over the past year? c. If the inflation rate last year was 2 percent, what was your total real rate of return on this investment?

Suppose you bought a bond with an annual coupon of 9 percent one year ago for $1,160. The bond sells for $1,210 today. Assuming a $1,000 face value, what was your total dollar return on this investment over the past year? What was your total nominal rate of return on this investment over the past year? If the inflation rate last year was 7 percent, what was your total real rate of return on this investment?

Answer 2

Question

Chapter 10, Problem 4QP

(a)

Summary Introduction

To determine: The total dollar return, nominal rate of return, and real rate of return

Introduction:

The term return refers to a profit or gain made on an investment that is usually expressed in terms of percentage or dollars. The percentage total return shows the overall performance and efficiency of the amount invested.

The nominal rate of return refers to a return from an investment before considering the inflation rate, taxes, and other external expenses.

The real rate of return refers to an annual return earned from an investment. This is regulated for fluctuations in price as a result of inflation rate and other external effects.

(b)

Summary Introduction

To determine: The total dollar return, nominal rate of return, and real rate of return

Introduction:

The term return refers to a profit or gain made on an investment that is usually expressed in terms of percentage or dollars. The percentage total return shows the overall performance and efficiency of the amount invested.

The nominal rate of return refers to a return from an investment before considering the inflation rate, taxes, and other external expenses.

The real rate of return refers to an annual return earned from an investment. This is regulated for fluctuations in price as a result of inflation rate and other external effects.

(c)

Summary Introduction

To determine: The total dollar return, nominal rate of return, and real rate of return

Introduction:

The term return refers to a profit or gain made on an investment that is usually expressed in terms of percentage or dollars. The percentage total return shows the overall performance and efficiency of the amount invested.

The nominal rate of return refers to a return from an investment before considering the inflation rate, taxes, and other external expenses.

The real rate of return refers to an annual return earned from an investment. This is regulated for fluctuations in price as a result of inflation rate and other external effects.

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Answer 3

Question

Chapter 10, Problem 4QP

(a)

Summary Introduction

To determine: The total dollar return, nominal rate of return, and real rate of return

Introduction:

The term return refers to a profit or gain made on an investment that is usually expressed in terms of percentage or dollars. The percentage total return shows the overall performance and efficiency of the amount invested.

The nominal rate of return refers to a return from an investment before considering the inflation rate, taxes, and other external expenses.

The real rate of return refers to an annual return earned from an investment. This is regulated for fluctuations in price as a result of inflation rate and other external effects.

(b)

Summary Introduction

To determine: The total dollar return, nominal rate of return, and real rate of return

Introduction:

The term return refers to a profit or gain made on an investment that is usually expressed in terms of percentage or dollars. The percentage total return shows the overall performance and efficiency of the amount invested.

The nominal rate of return refers to a return from an investment before considering the inflation rate, taxes, and other external expenses.

The real rate of return refers to an annual return earned from an investment. This is regulated for fluctuations in price as a result of inflation rate and other external effects.

(c)

Summary Introduction

To determine: The total dollar return, nominal rate of return, and real rate of return

Introduction:

The term return refers to a profit or gain made on an investment that is usually expressed in terms of percentage or dollars. The percentage total return shows the overall performance and efficiency of the amount invested.

The nominal rate of return refers to a return from an investment before considering the inflation rate, taxes, and other external expenses.

The real rate of return refers to an annual return earned from an investment. This is regulated for fluctuations in price as a result of inflation rate and other external effects.

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Answer 4

Question

Chapter 10, Problem 4QP

(a)

Summary Introduction

To determine: The total dollar return, nominal rate of return, and real rate of return

Introduction:

The term return refers to a profit or gain made on an investment that is usually expressed in terms of percentage or dollars. The percentage total return shows the overall performance and efficiency of the amount invested.

The nominal rate of return refers to a return from an investment before considering the inflation rate, taxes, and other external expenses.

The real rate of return refers to an annual return earned from an investment. This is regulated for fluctuations in price as a result of inflation rate and other external effects.

(b)

Summary Introduction

To determine: The total dollar return, nominal rate of return, and real rate of return

Introduction:

The term return refers to a profit or gain made on an investment that is usually expressed in terms of percentage or dollars. The percentage total return shows the overall performance and efficiency of the amount invested.

The nominal rate of return refers to a return from an investment before considering the inflation rate, taxes, and other external expenses.

The real rate of return refers to an annual return earned from an investment. This is regulated for fluctuations in price as a result of inflation rate and other external effects.

(c)

Summary Introduction

To determine: The total dollar return, nominal rate of return, and real rate of return

Introduction:

The term return refers to a profit or gain made on an investment that is usually expressed in terms of percentage or dollars. The percentage total return shows the overall performance and efficiency of the amount invested.

The nominal rate of return refers to a return from an investment before considering the inflation rate, taxes, and other external expenses.

The real rate of return refers to an annual return earned from an investment. This is regulated for fluctuations in price as a result of inflation rate and other external effects.

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Answer 5

Chapter 10, Problem 4QP

(a)

Summary Introduction

To determine: The total dollar return, nominal rate of return, and real rate of return

Introduction:

The term return refers to a profit or gain made on an investment that is usually expressed in terms of percentage or dollars. The percentage total return shows the overall performance and efficiency of the amount invested.

The nominal rate of return refers to a return from an investment before considering the inflation rate, taxes, and other external expenses.

The real rate of return refers to an annual return earned from an investment. This is regulated for fluctuations in price as a result of inflation rate and other external effects.

(b)

Summary Introduction

To determine: The total dollar return, nominal rate of return, and real rate of return

Introduction:

The term return refers to a profit or gain made on an investment that is usually expressed in terms of percentage or dollars. The percentage total return shows the overall performance and efficiency of the amount invested.

The nominal rate of return refers to a return from an investment before considering the inflation rate, taxes, and other external expenses.

The real rate of return refers to an annual return earned from an investment. This is regulated for fluctuations in price as a result of inflation rate and other external effects.

(c)

Summary Introduction

To determine: The total dollar return, nominal rate of return, and real rate of return

Introduction:

The term return refers to a profit or gain made on an investment that is usually expressed in terms of percentage or dollars. The percentage total return shows the overall performance and efficiency of the amount invested.

The nominal rate of return refers to a return from an investment before considering the inflation rate, taxes, and other external expenses.

The real rate of return refers to an annual return earned from an investment. This is regulated for fluctuations in price as a result of inflation rate and other external effects.

Answer 6

Chapter 10, Problem 4QP

(a)

Summary Introduction

To determine: The total dollar return, nominal rate of return, and real rate of return

Introduction:

The term return refers to a profit or gain made on an investment that is usually expressed in terms of percentage or dollars. The percentage total return shows the overall performance and efficiency of the amount invested.

The nominal rate of return refers to a return from an investment before considering the inflation rate, taxes, and other external expenses.

The real rate of return refers to an annual return earned from an investment. This is regulated for fluctuations in price as a result of inflation rate and other external effects.

Answer 7

Chapter 10, Problem 4QP

(a)

Summary Introduction

To determine: The total dollar return, nominal rate of return, and real rate of return

Introduction:

The term return refers to a profit or gain made on an investment that is usually expressed in terms of percentage or dollars. The percentage total return shows the overall performance and efficiency of the amount invested.

The nominal rate of return refers to a return from an investment before considering the inflation rate, taxes, and other external expenses.

The real rate of return refers to an annual return earned from an investment. This is regulated for fluctuations in price as a result of inflation rate and other external effects.

Answer 8

(b)

Summary Introduction

To determine: The total dollar return, nominal rate of return, and real rate of return

Introduction:

The term return refers to a profit or gain made on an investment that is usually expressed in terms of percentage or dollars. The percentage total return shows the overall performance and efficiency of the amount invested.

The nominal rate of return refers to a return from an investment before considering the inflation rate, taxes, and other external expenses.

The real rate of return refers to an annual return earned from an investment. This is regulated for fluctuations in price as a result of inflation rate and other external effects.

Answer 9

(b)

Summary Introduction

To determine: The total dollar return, nominal rate of return, and real rate of return

Introduction:

The term return refers to a profit or gain made on an investment that is usually expressed in terms of percentage or dollars. The percentage total return shows the overall performance and efficiency of the amount invested.

The nominal rate of return refers to a return from an investment before considering the inflation rate, taxes, and other external expenses.

The real rate of return refers to an annual return earned from an investment. This is regulated for fluctuations in price as a result of inflation rate and other external effects.

Answer 10

(c)

Summary Introduction

To determine: The total dollar return, nominal rate of return, and real rate of return

Introduction:

The term return refers to a profit or gain made on an investment that is usually expressed in terms of percentage or dollars. The percentage total return shows the overall performance and efficiency of the amount invested.

The nominal rate of return refers to a return from an investment before considering the inflation rate, taxes, and other external expenses.

The real rate of return refers to an annual return earned from an investment. This is regulated for fluctuations in price as a result of inflation rate and other external effects.

Answer 11

(c)

Summary Introduction

To determine: The total dollar return, nominal rate of return, and real rate of return

Introduction:

The term return refers to a profit or gain made on an investment that is usually expressed in terms of percentage or dollars. The percentage total return shows the overall performance and efficiency of the amount invested.

The nominal rate of return refers to a return from an investment before considering the inflation rate, taxes, and other external expenses.

The real rate of return refers to an annual return earned from an investment. This is regulated for fluctuations in price as a result of inflation rate and other external effects.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 10 - Investment Selection Given that RadNet was up by...Ch. 10 - Investment Selection Given that Transocean was...Ch. 10 - Risk and Return We have seen that over long...Ch. 10 - Prob. 4CQ Ch. 10 - Effects of inflation Look at Table 10.1 and Figure...Ch. 10 - Risk Premiums Is it possible for the risk premium...Ch. 10 - Prob. 7CQ Ch. 10 - Returns Two years ago, the Lake Minerals and Small...Ch. 10 - Prob. 9CQ Ch. 10 - Historical Returns The historical asset class...

Solution Summary: The author explains the term "total dollar return" and the nominal and real rates of return.

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