A bond with a face value of $1,000 has 10 years until maturity, carries a coupon rate of 8.6%, and sells for $1,140. Interest is paid annually.

If the bond has a yield to maturity of 9.4% 1 year from now, what will its price be at that time? = 949.55

a) What will be the annual rate of return on the bond?

b) If the inflation rate during the year is 3%, what is the annual real 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.)