You bought one of Great White Shark Repellant Company's 8 percent coupon bonds one year ago for $800. These bonds make annual payments and mature 9 years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is 10 percent. If the inflation rate was 3.7 percent over the past year, what was your total real return on investment?
You bought one of Great White Shark Repellant Company's 8 percent coupon bonds one year ago for $800. These bonds make annual payments and mature 9 years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is 10 percent. If the inflation rate was 3.7 percent over the past year, what was your total real return on investment?
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 223.
Transcribed Image Text:You bought one of Great White Shark Repellant Company's 8 percent coupon bonds one year ago for $800. These bonds make annual
payments and mature 9 years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is 10
percent. If the inflation rate was 3.7 percent over the past year, what was your total real return on investment?
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