# Suppose you bought a bond with a 4.9 percent coupon rate one year ago for $1,010. The

## Question:

Suppose you bought a bond with a 4.9 percent coupon rate one year ago for $1,010. The bond sells for $1,052 today.

a. Assuming a $1,000 face value, what was your total dollar return on this investment over the past year?

b. What was your total nominal rate of return on this investment over the past year?

c. If the inflation rate last year was 3 percent, what was your total real rate of return on this investment?

CouponA coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...

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**Related Book For**

## Corporate Finance

**ISBN:** 978-1259918940

12th edition

**Authors:** Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan