2. If your nominal rate of return is 12.18 percent and your real rate of return is 4.47 percent, what is the inflation rate? A. 3.47 percent B. 5.01 percent C. 7.38 percent D. 9.35 percent E. 11.92 percent

3. Consider a bond issued by IBM Inc. exactly one year ago. At that time the bonds time to maturity was 30 years. The bond pays semiannual coupons with the annual coupon rate of 5%. The face value of the bond is $1000. What is the bonds price today, if todays market interest rate for bonds of comparable maturity and default risk is 4% per year.

A. $1120.23

B. $1170.73

C. $1242.32

D. $1611.45

E. $1683.12