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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Similar questions

An investor is considering the purchase of a(n) 6.000%, 15-year corporate bond that's being priced to yield 8.000%. She thinks that in a year, this bond will be priced in the market to yield 7.000%. Using annual compounding, find the price of the bond today and in 1 year. Next, find the holding period return on this investment, assuming that the investor's expectations are borne out. The price of the bond today is $ (Round to the nearest cent.)
Suppose that you bought a 14% Drexler bond with time to maturity of 9 years for $1,379.75 (semiannual coupons, interest rate=8%). After another ½ year, you sold the bond. Assuming that the required rate of return remained at 8%, what would the selling price be? What is the rate of return from this investment? If the interest rate dropped by 25 basis points, what would the selling price be? What would the rate of return from this investment be?
You just bought a newly issued bond which has a face value of $1,000 and pays its coupon once annually. Its coupon rate is 6%, maturity is 20 years and the yield to maturity for the bond is currently 8%. Suppose that one year after you bought the bond, the yield to maturity of the bond declines to 7%. Find the (before-tax) total dollar return (dollar returns from the coupon payment and capital gains) for the one-year investment period.
Please show work You want to purchase a bond that will pay you $300 per year for the next four years. If the annual interest rate is 4%, then what is the price of your bond if the market is in equilibrium? You buy a stock that is expected to pay a dividend of $300 per year for the next four years. If the discount rate is 5.5%, then what is the stock price in this case? Is this result the one you would expect when comparing this answer to the one you obtained in question 3? Why or why not?
Today, interest rates on 1-year T-bonds yield 1.7%, interest rates on 2-year T-bonds yield 2.5%, and interest rates on 3-year T-bonds yield 3.7%.a. If the pure expectations theory is correct, what is the yield on 1-year T-bonds one year from now? Be sure to use a geometric average in your calculations. Do not round intermediate calculations. Round your answer to four decimal places. b. If the pure expectations theory is correct, what is the yield on 2-year T-bonds one year from now? Be sure to use a geometric average in your calculations. Do not round intermediate calculations. Round your answer to four decimal places. c. If the pure expectations theory is correct, what is the yield on 1-year T-bonds two years from now? Be sure to use a geometric average in your calculations. Do not round intermediate calculations. Round your answer to four decimal places.
A bond with a face value of $1,000 was purchased last year for $985 and sold today for $1,120. The coupon rate on the bond is 7% and inflation this past year was 3%. e. What is the income yield? f. What is the capital gain yield? g. What was the total return on investment? h. What was the real rate of return?
Assume that all interest rates are certain - all investors know how interest rates will change over time. Two years ago, you purchased a 10-year bond with a face value of $1,000.00 and annual coupons of 7.4%. When you purchased the bond, the one year spot rate was 6.3% and the two year spot rate was 9.8%. You reinvested the first coupon payments at the prevailing rate and then sold the bond after two years at a yield to maturity of 10.9%. If your realised compound yield on the bond was 14.4%, what was the bond's initial purchase price? O a. $747.53 O b. $749.59 O c. $751.34 O d. $755.36 O e. $753.70 O f. $746.65 O g. $754.38 Oh. $757.80
Suppose that you just bought a four-year $1,000 coupon bond with a coupon rate of 5.2% when the market interest rate is 5.2%. You sell the bond one year later after the market interest rate falls to 3.2%. The rate of return earned on the bond during the year was%. (Round your response to two decimal places.)
Your investments are earning 4% per annum compounded annually. You would like to compare this to the yield on bonds which are quoted on a compounded semi-annual basis. What is the equivalent return that you are earning per annum on a compounded semi-annual basis? (Do not round intermediate calculations. Report your result as a percentage. Round the final answers to 2 decimal places. Omit the % sign in your response. For example, if your answer is 3.21%, just enter 3.21) Numeric Response
JS er st un gs Sunland, Inc. management is considering purchasing a new machine at a cost of $4,370,000. They expect this equipment to produce cash flows of $791,390, $796,950, $866,730, $1,116,300, $1,212,360, and $1,300,900 over the next six years. If the appropriate discount rate is 15 percent, what is the NPV of this investment? (Enter negative amounts using negative sign e.g. -45.25. Do not round discount factors. Round other intermediate calculations and final answer to 0 decimal places, e.g. 1,525.) The NPV is tA $
We observe the following treasury yields on a particular day: one-year 1.50%, two-year 2.25%, and three year 3.25%. If two-year term premium is 0.25%, on that day what did investors expect one-year interest rate to be next year?Group of answer choices a)1.875% b)2.5% c)2.375% d)2.25%
Suppose you just purchased a bond (Face Value = $1,000) with 16 years to maturity that pays an annual coupon of $24.00 and is selling at par. Calculate the one-year holding period return for each of these two cases: Required: a. The yield to maturity is 3.90% one year from now. (Do not round intermediate calculations. Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.) HPR b. The yield to maturity is 1.70% one year from now. (Do not round intermediate calculations. Round your answer to 2 decimal places.) HPR %

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