The dollar return from the bond. Introduction: Total return refers to the total income from an investment. The total income includes the periodic incomes and the increase or decrease in the value of an asset. Dollar return refers to the return stated in dollar values. Percentage return refers to the returns stated as a percentage. Percentage returns determine the returns per one dollar of investment or per $100 worth of investment.

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Answer 1

Question

Chapter 12, Problem 4QP

a)

Summary Introduction

To determine: The dollar return from the bond.

Introduction:

Total return refers to the total income from an investment. The total income includes the periodic incomes and the increase or decrease in the value of an asset.

Dollar return refers to the return stated in dollar values. Percentage return refers to the returns stated as a percentage. Percentage returns determine the returns per one dollar of investment or per $100 worth of investment.

b)

Summary Introduction

To determine: The nominal rate of return from the bond.

Introduction:

The nominal rate of return refers to the rate of return on an investment before adjusting the inflation rate.

c)

Summary Introduction

To determine: The real rate of return from the bond.

Introduction:

The real rate of return refers to the rate of return on an investment after adjusting the inflation rate. The rate at which the inflation increases is the inflation rate. The Fisher effect helps to establish a relationship between the nominal rate of return, inflation, and the real rate of return.

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Calculating Returns Suppose you bought a 6 percent coupon bond one year ago for $1,040. The bond sells for $1,063 today. • Assuming a $1,000 face value, what was your total dollar return on this investment over the past year? • What was your total nominal rate of return on this investment over the past year? • If the inflation rate last year was 3 percent, what was your total real rate of return on this investment?

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8.2 Suppose you bought a 10 percent coupon bond one year ago for $1,150. The bond sells for $1,080 today. a. 1 Assuming a $1,000 face value, what was your total dollar return on this investment over the past year? b. What was your rate of return on this investment over the past year? (this will be a nominal rate of return) C. If the inflation rate last year was 2 percent, what was your total real rate of return on this investment?

Answer 2

Question

Chapter 12, Problem 4QP

a)

Summary Introduction

To determine: The dollar return from the bond.

Introduction:

Total return refers to the total income from an investment. The total income includes the periodic incomes and the increase or decrease in the value of an asset.

Dollar return refers to the return stated in dollar values. Percentage return refers to the returns stated as a percentage. Percentage returns determine the returns per one dollar of investment or per $100 worth of investment.

b)

Summary Introduction

To determine: The nominal rate of return from the bond.

Introduction:

The nominal rate of return refers to the rate of return on an investment before adjusting the inflation rate.

c)

Summary Introduction

To determine: The real rate of return from the bond.

Introduction:

The real rate of return refers to the rate of return on an investment after adjusting the inflation rate. The rate at which the inflation increases is the inflation rate. The Fisher effect helps to establish a relationship between the nominal rate of return, inflation, and the real rate of return.

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Answer 3

Question

Chapter 12, Problem 4QP

a)

Summary Introduction

To determine: The dollar return from the bond.

Introduction:

Total return refers to the total income from an investment. The total income includes the periodic incomes and the increase or decrease in the value of an asset.

Dollar return refers to the return stated in dollar values. Percentage return refers to the returns stated as a percentage. Percentage returns determine the returns per one dollar of investment or per $100 worth of investment.

b)

Summary Introduction

To determine: The nominal rate of return from the bond.

Introduction:

The nominal rate of return refers to the rate of return on an investment before adjusting the inflation rate.

c)

Summary Introduction

To determine: The real rate of return from the bond.

Introduction:

The real rate of return refers to the rate of return on an investment after adjusting the inflation rate. The rate at which the inflation increases is the inflation rate. The Fisher effect helps to establish a relationship between the nominal rate of return, inflation, and the real rate of return.

Expert Solution & Answer

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Answer 4

Question

Chapter 12, Problem 4QP

a)

Summary Introduction

To determine: The dollar return from the bond.

Introduction:

Total return refers to the total income from an investment. The total income includes the periodic incomes and the increase or decrease in the value of an asset.

Dollar return refers to the return stated in dollar values. Percentage return refers to the returns stated as a percentage. Percentage returns determine the returns per one dollar of investment or per $100 worth of investment.

b)

Summary Introduction

To determine: The nominal rate of return from the bond.

Introduction:

The nominal rate of return refers to the rate of return on an investment before adjusting the inflation rate.

c)

Summary Introduction

To determine: The real rate of return from the bond.

Introduction:

The real rate of return refers to the rate of return on an investment after adjusting the inflation rate. The rate at which the inflation increases is the inflation rate. The Fisher effect helps to establish a relationship between the nominal rate of return, inflation, and the real rate of return.

Expert Solution & Answer

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Answer 5

Chapter 12, Problem 4QP

a)

Summary Introduction

To determine: The dollar return from the bond.

Introduction:

Total return refers to the total income from an investment. The total income includes the periodic incomes and the increase or decrease in the value of an asset.

Dollar return refers to the return stated in dollar values. Percentage return refers to the returns stated as a percentage. Percentage returns determine the returns per one dollar of investment or per $100 worth of investment.

b)

Summary Introduction

To determine: The nominal rate of return from the bond.

Introduction:

The nominal rate of return refers to the rate of return on an investment before adjusting the inflation rate.

c)

Summary Introduction

To determine: The real rate of return from the bond.

Introduction:

The real rate of return refers to the rate of return on an investment after adjusting the inflation rate. The rate at which the inflation increases is the inflation rate. The Fisher effect helps to establish a relationship between the nominal rate of return, inflation, and the real rate of return.

Answer 6

Chapter 12, Problem 4QP

a)

Summary Introduction

To determine: The dollar return from the bond.

Introduction:

Total return refers to the total income from an investment. The total income includes the periodic incomes and the increase or decrease in the value of an asset.

Dollar return refers to the return stated in dollar values. Percentage return refers to the returns stated as a percentage. Percentage returns determine the returns per one dollar of investment or per $100 worth of investment.

Answer 7

Chapter 12, Problem 4QP

a)

Summary Introduction

To determine: The dollar return from the bond.

Introduction:

Total return refers to the total income from an investment. The total income includes the periodic incomes and the increase or decrease in the value of an asset.

Dollar return refers to the return stated in dollar values. Percentage return refers to the returns stated as a percentage. Percentage returns determine the returns per one dollar of investment or per $100 worth of investment.

Answer 8

b)

Summary Introduction

To determine: The nominal rate of return from the bond.

Introduction:

The nominal rate of return refers to the rate of return on an investment before adjusting the inflation rate.

Answer 9

b)

Summary Introduction

To determine: The nominal rate of return from the bond.

Introduction:

The nominal rate of return refers to the rate of return on an investment before adjusting the inflation rate.

Answer 10

c)

Summary Introduction

To determine: The real rate of return from the bond.

Introduction:

The real rate of return refers to the rate of return on an investment after adjusting the inflation rate. The rate at which the inflation increases is the inflation rate. The Fisher effect helps to establish a relationship between the nominal rate of return, inflation, and the real rate of return.

Answer 11

c)

Summary Introduction

To determine: The real rate of return from the bond.

Introduction:

The real rate of return refers to the rate of return on an investment after adjusting the inflation rate. The rate at which the inflation increases is the inflation rate. The Fisher effect helps to establish a relationship between the nominal rate of return, inflation, and the real rate of return.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 12.1 - Prob. 12.1ACQ Ch. 12.1 - Why are unrealized capital gains or losses...Ch. 12.1 - What is the difference between a dollar return and...Ch. 12.2 - Prob. 12.2ACQ Ch. 12.2 - Why doesnt everyone just buy small stocks as...Ch. 12.2 - What was the smallest return observed over the 88...Ch. 12.2 - About how many times did large-company stocks...Ch. 12.2 - What was the longest winning streak (years without...Ch. 12.2 - How often did the T-bill portfolio have a negative...Ch. 12.3 - Prob. 12.3ACQ

Solution Summary: The author explains that total return refers to the total income from an investment, including periodic incomes and increase or decrease in the value of an asset.

To determine: The nominal rate of return from the bond.

Introduction:

The nominal rate of return refers to the rate of return on an investment before adjusting the inflation rate.

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Chapter 12 Solutions

Solution Summary: The author explains that total return refers to the total income from an investment, including periodic incomes and increase or decrease in the value of an asset.

To determine: The nominal rate of return from the bond. Introduction: The nominal rate of return refers to the rate of return on an investment before adjusting the inflation rate.

Want to see the full answer?

Chapter 12 Solutions

To determine: The nominal rate of return from the bond.

Introduction:

The nominal rate of return refers to the rate of return on an investment before adjusting the inflation rate.