Question: Let's say you buy a $1,000 fiveyear US Bond that will pay 2.5% a year. You feel this is a good interest rate for a very safe investment. However, you did not consider inflation, and in fact, I inflation is worse than you thought it would be it averages 3% over the next five years, the life of the bond. What was your \"real" interest rate? a) Even though your nominal rate was 2.5%, your real interest rate is (positive) +55% b) Even though your nominal rate was 2.5%, your real interest rate is (positive) +05% c) Even though your nominal rate was 2.5%, your real interest rate is (negative) -0.5%