Q 5.20. On May 31, 2002, the Wall Street Journal reported on page C10 that a thirty-
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Q 5.20. On May 31, 2002, the Wall Street Journal reported on page C10 that a thirty- year inflation-adjusted bond offered a real yield of about 3.375% per year. The current inflation rate was only 1.6% per year, and a normal thirty-year Treasury bond (not inflation adjusted) offered a nominal yield of 5.600 % per year. In what inflation scenario would you have been better off buying one or the other?
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