Problem:
You bought one of Great White Shark Repellant Co.'s 10 percent coupon bonds one year ago for $800. These bonds make annual payments and mature 6 years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is 12 percent.
Required:
Question: If the inflation rate was 3.8 percent over the past year, what was your total real return on investment?
Note: Solve the problem and show all work.