Determine the total real return on investment for the sale, today, of 6.4% coupon bonds purchased one year ago for $1,058, given that these bonds make annual payments, mature thirteen years from now, the required return on the bonds is 6% and the inflation rate was 2.8 percent over the past year. (Enter your
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- Suppose you bought a bond with an annual coupon rate of 8.4 percent one year ago for $960. The bond sells for $960 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? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. If the inflation rate last year was 2.5 percent, what was your total real rate of return on this investment? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Total dollar return b. Nominal rate of return с. Real rate of return %Suppose you bought a bond with an annual coupon rate of 7.6 percent one year ago for $840. The bond sells for $885 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? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. If the inflation rate last year was 2.5 percent, what was your total real rate of return on this investment? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)Consider these long-term investment data: • The price of a 10-year $100 par value zero coupon inflation-indexed bond is $88.36. • A real-estate property is expected to yield 2% per quarter (nominal) with a SD of the (effective) quarterly rate of 10%. Compute the annual rate on the real (i.e., inflation-indexed) bond. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Real bond annual rate %
- Consider these long-term investment data: • The price of a 10-year $100 par zero coupon inflation-indexed bond is $84.53. • A real-estate property is expected to yield 2% per quarter (nominal) with a SD of the (effective) quarterly rate of 10%. Compute the annual rate on the real bond. (Do not round intermediate calculations. Round your answer to 2 decimal places.)Suppose that the current 6-month, 1-year, 1.5-year and 2-year interest rates are 2.2%,3%, 3.5% and 3.75%, respectively. a) Calculate the prices of a 1-year and 2-year Treasury bonds. In each case, assumethe face value of £100 and the coupon rate of 5% per annum and that coupons arepaid semi-annually. Assume continuous compounding. Compare the obtainedresults. Are they consistent with your expectations? b) Calculate the par yield on the 1-year bond with semi-annual couponsPlease include the excel formula Suppose you bought a bond with an annual coupon of 6 percent one year ago for $1,010. The bond sells for $1,025 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? Input area: Coupon rate 6% Initial price $1,010 Ending price $1,025 Par value $1,000 Inflation rate 3% (Use cells A6 to B10 from the given information to complete this question.) Output area: Coupon paid Dollar return Nominal return Real return
- Suppose that the current 6-month, 1-year, 1.5-year and 2-year interest rates are 2.2%,3%, 3.5% and 3.75%, respectively. a) Calculate the prices of 1-year and 2-year Treasury bonds. In each case, assume theface value of £100 and the coupon rate of 5% per annum and that coupons arepaid annually. Assume continuous compounding. b) Calculate the prices of the bonds from a), applying annual discounting. Compareyour results to those obtained in a).The nominal rate of return is ______% earned by an investor in a bond that was purchased for $963, has an annual coupon of 8%, and was sold at the end of the year for $1041? Assume the face value of the bond is $1,000Consider the following balance sheet (in millions) for an FI: Assets Liabilities Duration = 10 years $950 Duration = 2 years $860 Equity $90 What is the impact on the FI's equity value if the relative change in interest rates is an increase of 1 percent? That is, DR/(1+R) = 0.01. Suppose that the FI in part (c) macrohedges using Treasury bond futures that are currently priced at 96. What is the impact on the FI's futures position if the relative change in all interest rates is an increase of 1 percent? That is, DR/(1+R) = 0.01. Assume that the deliverable Treasury bond has a duration of nine years. If the FI wants to macrohedge, how many Treasury bond futures contracts does it need?
- Consider a 1-year treasury bill that currently earns 3.25%. The increase in rates for the above bill is shown as follows: Year Increase in rate 1 year from now 3.6% 2 years from now 3.85% The liquidity premium is as follows: 2-year securities 3-year securities 0.07% 0.15% Assume that if the liquidity premium theory is correct. Calculate the current rate on 3-year Treasury securities.You purchased a $1000 face value zero-coupon bond one year ago for $260.3. The market interest rate is now 7.36 percent. If the bond had 19 years to maturity when you originally purchased it, what was your total return for the past year?Assume semiannual compounding. Answer as a percentage to two decimals (if you get -0.0435, you should answer -4.35).You purchased a zero-coupon bond one year ago for $278.33. The market interest rate is now 8 percent. Assume semiannual compounding. If the bond had 17 years to maturity when you originally purchased it, what was your total return for the past year? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Total return for the past year %