Question

Compute the total return on all of these in the respective market:

1. The S&P500 stock index closes at 2250 at the end of March. At the end of June, the index closes at

2475. Assume the S&P500 has a divided yield of 3% annually.

2. The S&P500 stock index closes at 2500 at the end of December. The following June, the index

closes at 2400. Assume the S&P500 has a divided yield of 2% annually.

3. A Treasury bond with 2.5% coupon is auctioned at $100 (par). Six months later, it trades at $101.50.

4. A Treasury bond with 5% coupon trades at $125 per $100 face value. Three months later, it trades at

$115.

5. A Treasury inflation-indexed bond with 1% coupon is offered at 90 per $100 real face value. A year

later, it trades at 92.25. Assume the CPI has increased 2% during this period.

6. A Treasury inflation-indexed bond with 3% coupon is offered at 110 per $100 real face value. A year later, it trades at 108.90. Assume the CPI has increased 1.5% during this period.

Answer 1

The questions pertain to the calcultion of return on stocks and bonds.

Question 01:

Question 02:

Question 03:

Question 04: