Carl Foster, a trainee at an investment banking firm, is trying to get an idea of what real rate of return investors are expecting in today's marketplace. He has looked up the rate paid on 3-month U.S. Treasury bills and found it to be 5.5%. He has decided to use the rate of change in the Consumer Price Index as a proxy for the inflationary expectations of investors. That annualized rate now stands at 3.0% On the basis of the information that Carl has collected, what estimate can he make of the real rate of return?

1) The estimate of the real rate of return is ? Round to one decimal place

The relationship between a bond's yield to maturity and coupon interest rate can be used to predict its pricing level. For the bond listed below, state whether the price of the bond will be at a premium to par, at par, or at a discount to par.

Coupon Interest Rate 8% Yield to Maturity 8%

What is the price of the bond in relation to its par value?(Select the best answer below.)

a) The bond sells at par

b) The bond sells at a discount to par

c) The bond sells at a premium to par