1. 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?
2. 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?
3. 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?
4. 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?