In a high-inflation economy, a corporate bond provided a nominal HPR of 45% per year. The inflation rate during this period was 38% per year. Calculate the real HPR on the bond.
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- Quick answer of this general accounting questionA 10-year government bond has face value of OR 200 and a coupon rate of 6% paid semiannually. Assume that the interest rate is equal to 8% per year. What is the bond’s price? What is the reason for the difference in price on an annual and semiannually basis? Discuss the role of financial managers.None
- Financial accountingDuring a period of severe inflation, a bond offered a nominal HPR of 80% per year. The inflation rate was 70% per year.a. What was the real HPR on the bond over the year?b. Compare this real HPR to the approximation rreal ≈ rnom − i.The outstanding bonds of Winter Tires Inc. provide a real rate of return of 4.2 percent. If the current rate of inflation is 5.8 percent, what is the actual nominal rate of return on these bonds?
- A 5-year government bond has a face value of £1,000 and an annual nominal couponrate of 8%. Assume that the relevant nominal market interest rate (annualized) is equalto 10%. The coupon payments are made quarterly.(a) Calculate the present value of the bond and the effective market interest rate.During a period of severe inflation, a bond offered a nominal HPR of 86% per year. The inflation rate was 76% per year. a. What was the real HPR on the bond over the year? (Round your answer to 2 decimal places.) b. Find the approximation rreal ≈ rnom – i.A bond par value is $2,000 and the coupon rate is 6 percent. The bond price was $1,946.61 at the beginning of the year and $1,982.79 at the end of the year. The inflation rate for the year was 2.4 percent. What was the bond's real return for the year?
- During a period of severe inflation, a bond offered a nominal HPR of 87% per year. The inflation rate was 78% per year. a. What was the real HPR on the bond over the year? (Round your answer to 2 decimal places.) Real HPR % b. Find the approximation rreal ľnom i. Approximation %Suppose a U.S. government bond pays $2,155.40 in 5 years at 6% interest. Calculate the present value of the bond.A Treasury bond that you own at the beginning of the year is worth $1,100. During the year, it pays $48 in interest payments and ends the year valued at $1,110.What was your dollar return and percent return?