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Primary dealers are looking for a real return of 2.8% on the 10 Treasury. They believe that inflation will average 2%. a. What will the

Primary dealers are looking for a real return of 2.8% on the 10 Treasury. They believe that inflation will average 2%.

a. What will the YTM be on the bond (Nominal)?

b. If the bond has a coupon of 5%, will the bond trade at par, a discount or a premium?

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