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Suppose an investor holds a 2 year real return bond that expires at the end of the year. The coupon rate on the real return
Suppose an investor holds a 2 year real return bond that expires at the end of the year. The coupon rate on the real return bond is 1% and its face value is $1000. The inflation rate in the current year is 3% and was 4% in the previous year. What is the total payment the investor receives at the end of the year?
(Please write quick explanation for each step of the process, thank you so much!)
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