Suppose you bought a bond with an annual coupon rate of 8.9 percent one year ago for $912. The bond sells for $956 today. a. Assuming a $1,000 face value, what was your total dollar return on this investment over the past year? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) 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 4.4 percent, what was your total real rate of return on this investment? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Suppose you bought a bond with an annual coupon rate of 8.9 percent one year ago for $912. The bond sells for $956 today. a. Assuming a $1,000 face value, what was your total dollar return on this investment over the past year? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) 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 4.4 percent, what was your total real rate of return on this investment? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
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It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
Question
![Problem 10-4 Calculating Returns [LO 1]
Suppose you bought a bond with an annual coupon rate of 8.9 percent one year ago for
$912. The bond sells for $956 today.
a. Assuming a $1,000 face value, what was your total dollar return on this investment
over the past year? (Do not round intermediate calculations and round your answer
to the nearest whole number, e.g., 32.)
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 4.4 percent, what was your total real rate of return on
this investment? (Do not round intermediate calculations and enter your answer as
a percent rounded to 2 decimal places, e.g., 32.16.)
a. Total dollar return
b. Total nominal rate of return
%
c. Total real rate of return
%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fca0ee9f0-26a0-4b69-a817-d7c752512585%2Fdb39a791-ebae-4c35-974f-ec4a5b1a2217%2F6vt2aw6_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 10-4 Calculating Returns [LO 1]
Suppose you bought a bond with an annual coupon rate of 8.9 percent one year ago for
$912. The bond sells for $956 today.
a. Assuming a $1,000 face value, what was your total dollar return on this investment
over the past year? (Do not round intermediate calculations and round your answer
to the nearest whole number, e.g., 32.)
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 4.4 percent, what was your total real rate of return on
this investment? (Do not round intermediate calculations and enter your answer as
a percent rounded to 2 decimal places, e.g., 32.16.)
a. Total dollar return
b. Total nominal rate of return
%
c. Total real rate of return
%
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