Consider a bond with the following performance over the past year:

- purchase price = $100

- selling price = $98

- annual coupon interest = $6

Assume the inflation rate was 4% during the year. the nominal and rate and real rate of return on this bond are:

Select one:

a. Nominal rate = 0%, Real rate = 4%

b. Nominal rate = 6%, Real rate = 2%

c. Nominal rate = 4%, Real rate = 0%

d. Nominal rate = -2%, Real rate = -6%