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Suppose that you buy a two-year 7.0% bond at its face value. What will be your nominal return over the two years if inflation is

Suppose that you buy a two-year 7.0% bond at its face value. What will be your nominal return over the two years if inflation is 2.0% in the first year and 4.0% in the second? What will be your real return? Suppose that the bond is a TIPS. What will be your real and nominal returns?

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