Question
The outstanding bonds of Roy Thomas, Inc. provide a real rate of return of 3.59 percent. The current rate of inflation is 2.15 percent. What
The outstanding bonds of Roy Thomas, Inc. provide a real rate of return of 3.59 percent. The current rate of inflation is 2.15 percent. What is the nominal rate of return on these bonds? (Use the exact relationship between rates of return and inflation. Provide answer in percents, not in decimals.)
The nominal rate of return on the bonds of Stu's Boats is 6.29 percent. The real rate of return is 5.78 percent. What is the rate of inflation? (Use the exact relationship between rates of return and inflation. Provide answer in percents, not in decimals.)
The MerryWeather Firm wants to raise $17 million to expand its business. To accomplish this, the firm plans to sell 16-year, $1,000 face value zero-coupon bonds. The bonds will be priced to yield 8 percent. What is the minimum number of bonds the firm must sell to raise the money it needs? Use annual compounding.
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