Question

Check my work A portfolio manager invested $2,300,000 in bonds. In one year, the market value of the bonds dropped to $2,280,000. The interest payments during the year totaled $92,000. a. What was the manager's total rate of return for the year? (Round your intermediate calculations to 4 decimal places. Round your answer to 2 decimal places.) Total rate of return 3.13% b. What was the manager's real rate of return if the inflation rate during the year was 2.3%? (Round your intermediate calculations to 4 decimal places. Round your answer to 2 decimal places.) % Real rate of return

Answer 1

Sol 0 Given, P4A =2,300,000 44 -92,000 pt = 2,280,000 (a) total rate of return earned. + Pt-Pt- 4 Pt- 92,000+2,280,000 -2,300,000 2,380,000 12000 2,300,000 0.0313 => 3.13% (6) real rate of Return 1 + Nominal rate of return It Inflation Rate (140.03/3 T+0.023 1.0313 1.023 1.0081 - 0.0081 >>[0-8172 (2-decimals).