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Suppose that you buy a two-year 8.5% bond at its face value 0-1. What will be your total nominal return over the two years if

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Suppose that you buy a two-year 8.5% bond at its face value 0-1. What will be your total nominal return over the two years if inflation is 3.5% in the first year and 5.5% 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 retum % 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.) 96 Real retum Nominal return 96

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