What are your nominal and real rates of return

Assignment Help Financial Accounting

Reference no: EM131219163

Suppose you buy a bond for $1,020 with a 15-year maturity paying an annual coupon of $80. A year later interest rates have dropped and the bond’s price has increased to $1,050. What are your nominal and real rates of return? Assume the inflation rate is 4 percent.

Reference no: EM131219163

Questions Cloud

Responsible for explaining cost estimation techniques : Imagine you are responsible for explaining cost estimation techniques and subsequent uses of cost information to team members outside of your department. How would you describe their interrelationship? Include charts, external references, etc. as app..

How much of the payment is taxable dividend : Blue Moon Incorporated is owned 100% by Maggie Hayes. The corporation redeemed 25% of her stock for $130,000 cash. The corporation’s E&P is $110,000. Her stock basis is $80,000. How much of the payment is a taxable dividend?

Classify the transaction as material : Explain whether you would classify the transaction as material and explain why or why not. Rainbow Records expenses all capital equipment under $25,000 on the basis it is immaterial. The company has followed this practice for a number of years. its a..

An application of the accrual basis of accounting : As of January 31, Hudson Corporation owes $600 to U-Rent-It for equipment used during January. If no adjustment is made for this item at January 31, how will Hudson's financial statements be affected? Which of the following is not an application of t..

What are your nominal and real rates of return : Suppose you buy a bond for $1,020 with a 15-year maturity paying an annual coupon of $80. A year later interest rates have dropped and the bond’s price has increased to $1,050. What are your nominal and real rates of return? Assume the inflation rate..

Diversification into silver mining stocks-automotive stocks : An investor is currently fully invested in gold mining stocks. Which action would do more to reduce portfolio risk: diversification into silver mining stocks or into automotive stocks? Why?

Assets and liabilities-what was their fair value : Grant Company acquired all of Bedford Corporation's assets and liabilities on January 1, 20X2, in a business combination. At that date, Bedford reported assets with a book value of $630,000 and liabilities of $368,000. If the book value of Bedford's ..

Review targets dividend policy and its history : Determine how Target got its initial financial start in terms of debt (liabilities) or equity (capital). Support your response. Review Target’s dividend policy and its history. Based on the information, discuss the trends over the past year.

Record the annual dividend declared and received : On January 1, 2013, Plano Company acquired 8 percent (16,800 shares) of the outstanding voting shares of the Sumter Company for $235,200, an amount equal to Sumter’s underlying book and fair value. Record the annual dividends declared and received fr..

User Account

All Pages