You bought one of Bergen Manufacturing Co.’s 5.4 percent coupon bonds one year ago for $1,053....

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You bought one of Bergen Manufacturing Co.’s 5.4 percent couponbonds one year ago for $1,053. These bonds make annual payments andmature twelve years from now. Suppose you decide to sell your bondstoday when the required return on the bonds is 4.5 percent.

If the inflation rate was 3.8 percent over the past year, whatwould be your total real return on the investment? (Do notround intermediate calculations and enter your answer as a percentrounded to 2 decimal places, e.g., 32.16.)

  Total real return %

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4.1 Ratings (790 Votes)

Market Price of the Bond The Market Price of the Bond is the Present Value of the Coupon Payments plus the Present Value of the face Value Face Value of the bond 1000 Annual Coupon Amount 54 1000 x 540 Annual Yield to Maturity 450 Maturity See Answer

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You bought one of Bergen Manufacturing Co.’s 5.4 percent couponbonds one year ago for $1,053. These bonds make annual payments andmature twelve years from now. Suppose you decide to sell your bondstoday when the required return on the bonds is 4.5 percent. If the inflation rate was 3.8 percent over the past year, whatwould be your total real return on the investment? (Do notround intermediate calculations and enter your answer as a percentrounded to 2 decimal places, e.g., 32.16.) Total real return%