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You bought a 25-year ABC bond that has a coupon rate of 9 percent and sells at a yield to maturity of 8 percent. You
You bought a 25-year ABC bond that has a coupon rate of 9 percent and sells at a yield to maturity of 8 percent. You hold this bond for 1 year before selling.
a. If in one year the yield to maturity for this bond is 10 percent, what is your rate of return?
b. What is your real rate of return if the inflation rate is 3%?
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