During a period of severe inflation, a bond offered a nominal HPR of 80% per year. The

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During a period of severe inflation, a bond offered a nominal HPR of 80% per year. The inflation rate was 70% per year.

a. What was the real HPR on the bond over the year?

b. Compare this real HPR to the approximation rreal ≈ rnom − i. p-963

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ISE Investments

ISBN: 9781266085963

13th International Edition

Authors: Zvi Bodie, Alex Kane, Alan Marcus

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