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Consider a newly issued OATi bond with a 10 -year maturity, par value of 1,000, and coupon rate of 0.90% with annual payments. Expected CPI
Consider a newly issued OATi bond with a 10 -year maturity, par value of 1,000, and coupon rate of 0.90% with annual payments. Expected CPI inflation at the time of issue was 1.50\%. If INSEE announces that the inflation rate in the first year turns out to be 1.00%, what is the nominal rate of return on this bond in the first year? What is your real return at the end of the first year? a. Nominal 0.90%; real 0.50% b. Nominal 0.50\%; real 0.90\% c. Nominal 0.40\%; real 0.90\% d. Nominal 0.90\% ; real 0.40% e. Nominal 0.40%; real 0.50%
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