1. ## financial homework help

calculating returns:
suppose you bought a 7 percent coupon bond one year ago for $893. the bond sells for$918 today.
a. assuming a \$1000 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 yr.
c.if inflation rate last year was 4 percent, what was your total real rate of return on this investment?

2. ## Re: financial homework help

Please demonstrate a cashflow map and we can start.

3. ## Re: financial homework help

i'm kind of stuck to what to do because my online class instructor does not give me notes to start

4. ## Re: financial homework help

Originally Posted by dragonfly1
i'm kind of stuck to what to do because my online class instructor does not give me notes to start
Well fire him/her then!

Do you know what "a 7% bond with semiannual coupons" means?

5. ## Re: financial homework help

yes i think it means it paid twice a yr would it be 70 x 2= 140.00

6. ## Re: financial homework help

You MUST be able to draw a map. In this case, it might look like this:

Time is years.

0 -- (893.00)
½ -- +70.00
1 -- +70.00 + 918.00

7. ## Re: financial homework help

here is what i recd from the instructor
the total dollar return is the change in price plus the coupon payment
the nominal percentage return of the bond is total dollar return/purchase price
(1+R)=(1+r)(1+h)

8. ## Re: financial homework help

Originally Posted by dragonfly1
the total dollar return is the change in price plus the coupon payment
Well DFly, the dollar return is EASILY calculated as 70 + 70 + 918-893 = 165 : do you not "see" that?

9. ## Re: financial homework help

sounds like you are being smart here, if i saw it i would not ask for help
i'm new to this that's why i'm asking for help

10. ## Re: financial homework help

Originally Posted by dragonfly1
sounds like you are being smart here, if i saw it i would not ask for help
i'm new to this that's why i'm asking for help
My purpose was to try and see "where you're at", as we have no idea since you are disregarding the rules
and showing no work; if you are so easily "hurt", then I'll bow out and leave you in TK's hands

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