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An investor purchases a 3 0 - year treasury bond with a face value of $ 1 0 0 , 0 0 0 for $
An investor purchases a year treasury bond with a face value of $ for $ The bond has
a semiannual coupon rate of and deposits the dividend payments into a savings account that pays
interest at rate of compounded semiannually.
a If the investor only deposits into the savings account come from the bond, how much money
will be in the investors account at the end of the year period?
If inflation averages every six months over the year period
b What is the purchasing power of your answer to part a in todays dollars?
c What is the real rate of return on this investment?
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