Question

A bond par value is $1,000 and the coupon rate is 6.5 percent. The bond price was $947.00 at the beginning of the year and $985.39 at the end of the year. The inflation rate for the year was 2.2 percent. What was the bond's real return for the year?

Answer 1

10.92%

Step-by-step explanation:

Bond return = ($985.39 - 947.00 + 65) / $947.00

Bond return = .1092, or 10.92%