Problem:
Suppose you bought a 6 percent coupon bond one year ago for $1,040. The bond sells for $1,063 today.
Required:
Question 1: Assuming a $1,000 face value, what was your total dollar return on this investment over the past year?
Question 2: What was your total nominal rate of return on this investment over the past year?
Question 3: If the inflation rate last year was 3 percent, what was your total real rate of return of this investment?
Note: Please show how to work it out.