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Suppose that you buy a two-year 8% bond at its face value, answer the following: a-1. What will be your total nominal return over the
Suppose that you buy a two-year 8% bond at its face value, answer the following: a-1. What will be your total nominal return over the two years if inflation is 3% in the first year and 5% in the second? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Nominal return a-2. What will be your total real return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Real return Real return % b. Now suppose that the bond is a TIPS. What will be your total 2-year real and nominal returns? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Real return Nominal return
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