Calculating Return for a Year-Old 12% Coupon Bond
Not what you're looking for?
Suppose you had bought a 12% coupon bond one year ago for $1120. The bond sells for $1085 today.
a) assuming a $1000 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 4%, what was your total real rate of return on this investment?
Purchase this Solution
Solution Summary
The solution calculates the total dollar return, nominal rate of return and total real rate of return on a bond in clearly-shown calculations.
Solution Preview
a)
This year you'll get = Coupon Payment + Selling price now = 120 + 1085,
Note, a 12% coupon is always calculated on the face value in this case its $1000.
...
Purchase this Solution
Free BrainMass Quizzes
Marketing Management Philosophies Quiz
A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.
Lean your Process
This quiz will help you understand the basic concepts of Lean.
Operations Management
This quiz tests a student's knowledge about Operations Management
Social Media: Pinterest
This quiz introduces basic concepts of Pinterest social media
Marketing Research and Forecasting
The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.