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1. A 10 year coupon bond has a 12% coupon rate and pays coupons semiannually. Its face value is $1000 and sells for $1400. The
1. A 10 year coupon bond has a 12% coupon rate and pays coupons semiannually. Its face value is $1000 and sells for $1400. The average annual inflation rate over the next 10 years is expected to be 2%. What is the real yield to maturity on this bond?
a. 3.25% b. 8.5% c. 4.41% d. 1.39% e. 10%
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