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5 A bond with a face value of $1,000 has 10 years until maturity, carries a coupon rate of 8.0%, and sells for $1,200. Interest
5 A bond with a face value of $1,000 has 10 years until maturity, carries a coupon rate of 8.0%, and sells for $1,200. Interest is paid annually. (Assume a face value of $1,000 and annual coupon payments.) 4 points a. If the bond has a yield to maturity of 10.0% 1 year from now, what will its price be at that time? (Do not round intermediate calculations. Round your answer to nearest whole number.) Answer is complete and correct. Price $ 885 b. What will be the rate of return on the bond? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign.) > Answer is complete but not entirely correct. Rate of return 19.58 X % c. If the inflation rate during the year is 3%, what is the real rate of return on the bond? (Assume annual interest payments.) (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign.) X Answer is complete but not entirely correct. Real rate of return 21.93 % %
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