Question
Suppose that you buy a 2-year maturity bond for $970 that will pay you coupon payments of $60 at the end of each year. The
Suppose that you buy a 2-year maturity bond for $970 that will pay you coupon payments of $60 at the end of each year. The par value of the bond is $1,000. What real rate of return will you earn if the inflation rate is 5 percent?
Note: DO NOT calculate the approximate version of the real rate.
Multiple Choice
2.55%.
1.55%.
7.67%.
2.67%.
-2%.
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Derivatives Markets
Authors: Robert L. McDonald
2nd Edition
032128030X, 978-0321280305
