Question
A bond has 10 years until maturity, a coupon rate of 8.2%, and sells for $1,180. Interest is paid annually. (Assume a face value of
A bond has 10 years until maturity, a coupon rate of 8.2%, and sells for $1,180. Interest is paid annually. (Assume a face value of $1,000.)
A.) If the bond has a yield to maturity of 9.8% 1 year from now, what will its price be at that time?
Note: Do not round intermediate calculations. Round your answer to nearest whole number.
B.) What will be the rate of return on the bond?
Note: 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.
C.) If the inflation rate during the year is 3%, what is the real rate of return on the bond?
Note: 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.
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