Purchase Solution

Returns and Variability

Not what you're looking for?

Ask Custom Question

1. Returns: Suppose you bought a 6 percent coupon bond one year ago for $1040. The bond sells for 1,063 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?
d. What is the ending price?

2. Calculating Returns and Variability: You've observed the following returns on Mary An Data Corporation's stock over the past five years: 27 percent, 13 percent, 18 percent, -14 percent, and 9 percent.
a. What was the arithmetic average return on Mary Ann's stock over this five-year period?
b. What was the variance of Mary Ann's returns over this period? and The standard deviation?
c. Calculating the real returns and risk Premiums, suppose the average inflation rate over this period was 4.2 percent, and the average T-bill rate over the period was 5.1 percent, what was the Average Real Return on Mary Ann's stock?
d. What was the average nominal risk premium on Mary Ann's stock?

Purchase this Solution

Solution Summary

The returns and variability are six percent coupon bonds are determined. The average nominal risk premiums on Mary Ann's stocks.

Solution Preview

Please view the Excel document to view proper formatting of this answer.

Returns and Variability
1.  Returns:  Suppose you bought a 6 percent coupon bond one year ago for $1040.  The bond sells for 1,063 today. 
a.  Assuming a $1,000 face value, what was your total dollar return on this investment over the past year? 
Purchase price $1,040.00
Selling Price $1,063.00
Face Value $1,000.00
Coupon Rate 6%
Coupon Payment $60.00
Dollar Return $83.00

b.  What was your ...

Purchase this Solution

Free BrainMass Quizzes
Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.


This tests some key elements of major motivation theories.


This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

Writing Business Plans

This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.

Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.