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Suppose you bought a 10 percent coupon bond one year ago for $950. The face value of the bond is $1,000. The bond sells for

Suppose you bought a 10 percent coupon bond one year ago for $950. The face value of the bond is $1,000. The bond sells for $985 today. If the inflation rate last year was 9 percent, what was your total real rate of return on this investment?

Answer

a.

-5.32 percent

b.

-4.88 percent

c.

10.47 percent

d.

9.78 percent

e.

4.78 percent

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