Q. You are considering purchasing a $1,000 bond with a coupon rate of 9.5%, interest payable annually. If the current inflation rate is 4% per year, which will continue in the foreseeable future, what would be the real rate of return if you sold the bond at $1,080 after 2 years? (Solved)

1. about 9.5%

2. about 13.26%

3. about 9.26%

4. about 8.9%

  • d. about 8.9%
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