you bought one great white shark repellent company's 10 percent coupon bonds one year ago for $810. These bonds make annual payments and mature 9 years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is 12 percent. If the inflation rate was 3.6 percent over the past year, what was your total real return on investment

you bought one great white shark repellent company's 10 percent coupon bonds one year ago for $810. These bonds make annual payments and mature 9 years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is 12 percent. If the inflation rate was 3.6 percent over the past year, what was your total real return on investment

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 10P

See similar textbooks

Similar questions

You just bought a newly issued bond which has a face value of $1,000 and pays its coupon once annually. Its coupon rate is 6%, maturity is 20 years and the yield to maturity for the bond is currently 8%. Suppose that one year after you bought the bond, the yield to maturity of the bond declines to 7%. Find the (before-tax) total dollar return (dollar returns from the coupon payment and capital gains) for the one-year investment period.
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 6 percent one year ago for $1,170. The bond sells for $1,235 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?
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