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You bought one of Rocky Mountain Manufacturing Company's 9 percent coupon bonds one year ago for $1,047.30. These bonds make annual payments and mature seven years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is 8.5 percent. If the inflation rate was 3.9 percent over the past year, what would be your total real return on the investment? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. Total real return %

You bought one of Rocky Mountain Manufacturing Company's 9 percent coupon bonds one year ago for $1,047.30. These bonds make annual payments and mature seven years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is 8.5 percent. If the inflation rate was 3.9 percent over the past year, what would be your total real return on the investment? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. Total real return %

Essentials Of Investments
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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You bought one of Rocky Mountain Manufacturing Company's 9 percent coupon bonds one year ago for $1,047.30. These bonds make annual payments and mature seven years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is 8.5 percent. If the inflation rate was 3.9 percent over the past year, what would be your total real return on the investment? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. Total real return %
Transcribed Image Text:You bought one of Rocky Mountain Manufacturing Company's 9 percent coupon bonds one year ago for $1,047.30. These bonds make annual payments and mature seven years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is 8.5 percent. If the inflation rate was 3.9 percent over the past year, what would be your total real return on the investment? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. Total real return %
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