You bought one of Elkins Manufacturing Co.'s 6.2 percent coupon bonds one year ago for $1,038. These bonds make annual payments, mature 15 years from now, and have a par value of $1,000. Suppose you decide to sell your bonds today, when the required return on the bonds is 6 percent. If the inflation rate was 2.4 percent over the past year, what would be your total real return on the investment? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter6: Fixed-income Securities: Characteristics And Valuation
Section: Chapter Questions
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You bought one of Elkins Manufacturing Co.'s 6.2 percent coupon bonds one year ago for $1,038. These bonds make
annual payments, mature 15 years from now, and have a par value of $1,000. Suppose you decide to sell your bonds
today, when the required return on the bonds is 6 percent. If the inflation rate was 2.4 percent over the past year, what
would be your total real return on the investment? (Do not round intermediate calculations and enter your answer as a
percent rounded to 2 decimal places, e.g., 32.16.)
Transcribed Image Text:You bought one of Elkins Manufacturing Co.'s 6.2 percent coupon bonds one year ago for $1,038. These bonds make annual payments, mature 15 years from now, and have a par value of $1,000. Suppose you decide to sell your bonds today, when the required return on the bonds is 6 percent. If the inflation rate was 2.4 percent over the past year, what would be your total real return on the investment? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
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