10-4. Calculating Returns. Suppose you bought a 10 percent coupon bond one year ago
for $1,140. The bond sells for $1,092 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
c. If the inflation rate last year was 3 percent, what was your total real rate of
return on this investment?
You will find the answer to this puzzling question inside...