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A bond with an 8 percent coupon paid annually, has a yield to maturity of 8.5 percent, and a face value of $1,000. The inflation

bond with an 8 percent coupon paid annually, has a yield to

maturity of 8.5 percent, and a face value of $1,000. The

inflation rate for the same period is 4.6 percent. What is the real

rate of return on this bond?

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