Question
1. You earned 12% on your investments last year. During that time period, inflation averaged 6 percent. What was your real rate of return based
1. You earned 12% on your investments last year. During that time period, inflation averaged 6 percent. What was your real rate of return based on the Fisher formula?
2. A 10 year bond was issued three years ago. It pays 5% coupon semi-annually, and has a yield to maturity of 6%, what is the current market price of the bond?
3. A bond currently has a YTM of 8%. The bond matures in 3 years and pays interest semi-annually. The coupon rate is 7%. What is the current price of this bond?
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Heres how to solve each problem 1 Real rate of return Use the Fisher formula Real Return 1 Nominal R...
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Intermediate Microeconomics
Authors: Hal R. Varian
9th edition
978-0393123975, 393123979, 393123960, 978-0393919677, 393919676, 978-0393123968
