Suppose you bought a 11 percent coupon bond one year ago for $990. The bond sells for $1,040 today.
Requirement 1:
Assuming a $1,000 face value, what was your total dollar return on this investment over the past year?
Requirement 2:
What was your total nominal rate of return on this investment over the past year?
Requirement 3:
If the inflation rate last year was 5 percent, what was your total real rate of return on this investment? (Do not round intermediate calculations.)