Suppose you bought a bond with an annual coupon rate of 8.4 percent one year ago for $960. The bond sells for $960 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? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. If the inflation rate last year was 2.5 percent, what was your total real rate of return on this investment? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Total dollar return b. Nominal rate of return % C. Real rate of return %

Suppose you bought a bond with an annual coupon rate of 8.4 percent one year ago for $960. The bond sells for $960 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? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. If the inflation rate last year was 2.5 percent, what was your total real rate of return on this investment? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Total dollar return b. Nominal rate of return % C. Real rate of return %

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Ganymedes earned on his bond investments a real rate of return of 5.93 percent for a time period when the inflation rate was 12.42 percent. What was the actual nominal rate of return?
b) suppose that the market interest rate is 5%. Calculate the present value of the following. Show how your answer is obtained. calculation using a formula, not using excel. i）A coupon bond with an annual coupon payment of $135 and a face value of $1500 that matures in five years. ii) A discount bond with a face value of $5000 that matures in one years.
Suppose you bought a 5-year Treasury note (paying annual coupon of 2.0% and having face value of $1000) at par value. Two years later you sold the bond at a quoted price of $1020. If you can reinvest the coupons at the note's current yield to maturity, what is your geometric ANNUALIZED average holding period return over the 2-year period
What is the price of a bond that has a time to maturity of 4 years, a coupon rate of 3.3%, and a face value of $1,000, if the yield is 4.3%? (answer in dollars, with two decimal places but without the dollar sign, e.g. "983.23" is $983.23) Type your answer...
Consider a bond with a coupon of 4.6 percent, five years to maturity, and a current price of $1,047.80. Suppose the yield on the bond suddenly increases by 2 percent. a. Use duration to estimate the new price of the bond. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Price b. Calculate the new bond price using the usual bond pricing formula. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Price
Suppose that for a price of $960 you purchase a 7-year Treasury bond that has a face value of $1,000 and a coupon rate of 4%. If you sell the bond one year later for $1,120, what was your rate of return for that one-year holding period? The rate of return for the one-year holding period was %. (Round your response to one decimal place.)
Suppose that you just bought a four-year $1,000 coupon bond with a coupon rate of 6.5% when the market interest rate is 6.5%. You sell the bond one year later after the market interest rate falls to 4.5%. The rate of return earned on the bond during the year was %. (Round your response to two decimal places.)
Using the expectations hypothesis theory for the term structure of interest rates, determine the expected return for securities with maturities of two, three, and four years based on the following data. (Input your answers as a percent rounded to 2 decimal places.) 1-year T-bill at beginning of year 1 1-year T-bill at beginning of year 2 1-year T-bill at beginning of year 3 1-year T-bill at beginning of year 4 2-year security 3-year security 4-year security Expected Return Interest Rate 58 78 10% 128
A bond is issued with a coupon of 5% paid annually, a maturity of 31 years, and a yield to maturity of 8%. What rate of return will be earned by an investor who purchases the bond for $659.51 and holds it for 1 year if the bond's yield to maturity at the end of the year is 9% ? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign.) Rate of return %
Compute the price of a 5.9 percent coupon bond with 15 years left to maturity and a market interest rate of 9.6 percent. (Assume interest payments are semiannual.) (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Is this a discount or premium bond? premium bond discount bond
If you purchased a bond one year ago for $1000 and just sold it for $1100 after receiving the $50 annual coupon payment, then what was your real return on the investment if theinflation rate was 2.1% for the same year?
The following table summarizes prices of various default-free zero-coupon bonds (expressed as a percentage of the face value): a. Compute the yield to maturity for each bond. b. Plot the zero-coupon yield curve (for the first five years). c. Is the yield curve upward sloping, downward sloping, or flat? a. Compute the yield to maturity for each bond. The yield on the 1-year bond is 3.92 %. (Round to two decimal places.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Maturity (years) Price (per $100 face value) 1 $95.51 2 3 $91.10 $86.55 $81.69 $76.45 Print Donday