Purchase Solution

Calculating Return for a Year-Old 12% Coupon Bond

Not what you're looking for?

Ask Custom Question

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

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
Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

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.