Question
Suppose the real rate is 1.9% and the inflation rate is 3.1%. What rate would you expect to see on a Treasury bill? Squeakers Co.
Suppose the real rate is 1.9% and the inflation rate is 3.1%. What rate would you expect to see on a Treasury bill? Squeakers Co. issued 15-year bonds a year ago at a coupon rate of 4.1%. The bonds make semiannual payments and have a par value of $1,000. If the YTM is 4.5%, what is the current bond price? Henin Corp. issued 20-year bonds two years ago at a coupon rate of 5.3%. The bonds make semiannual payments. If these bonds currently sell for 105% of par value, what is the YTM? Say you own an asset that had a total return last year of 11.65%. If the inflation rate last year was 3.4%, what was your real return?
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