4
Suppose you bought a 7% coupon bond one year ago for $970. The bond sells for $940 today.
a. Assuming a $1,000 face value, what was your total dollar return on this investment over the past year? (Omit $ sign in
your response.)
Total dollar return
$
b. What was your total nominal rate of return on this investment over the past year? (Round your answer to 2 decimal
places.)
Nominal rate of return
%
c. If the inflation rate last year was 3%, what was your total real rate of return on this investment? (Do not round
intermediate calculations. Round the final answer to 2 decimal places.)
Real rate of return
%