Calculating Returns on a 7% Coupon Bond Investment: A Financial Math Problem

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In summary, the problem involves calculating the returns on a 7 percent coupon bond with a purchase price of $893 and a current selling price of $918. The face value of the bond is $1000. The total dollar return, nominal rate of return, and real rate of return are being requested.
  • #1
dragonfly1
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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?

can someone help solve this problem
 
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  • #2
dragonfly1 said:
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?

can someone help solve this problem
Being that you are new to this forum, you might not have had a chance to look at the Rules.

In the section on homework help, it says that you must make an effort at solving the problem you post before anyone can give you any help. You should also include relevant formulas.
 

Related to Calculating Returns on a 7% Coupon Bond Investment: A Financial Math Problem

1. What is the purpose of financial math problems?

Financial math problems are designed to help individuals and businesses make informed decisions about their finances. They involve using mathematical concepts and formulas to analyze and solve financial situations, such as calculating interest rates, investment returns, and budgeting.

2. What are some common financial math terms?

Some common financial math terms include interest, principal, rate, time, present value, future value, annuity, and compounding. It is important to understand these terms in order to solve financial math problems accurately.

3. How can I improve my financial math skills?

One way to improve your financial math skills is to practice solving a variety of problems and familiarizing yourself with different formulas and concepts. You can also take courses or workshops on financial math, or seek guidance from a financial advisor or mentor.

4. What are some real-life applications of financial math?

Financial math is used in a variety of real-life situations, such as calculating mortgage payments, budgeting for personal or business expenses, analyzing investment opportunities, and understanding the impact of inflation on purchasing power.

5. Can financial math be used to predict future financial outcomes?

While financial math can provide valuable insights and help make informed decisions, it cannot guarantee or predict future financial outcomes. Economic conditions, market fluctuations, and other factors can impact financial situations and may not always follow predicted trends.

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