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You want to invest in a bond for one year, and are deciding between the following two choices Bond A and Bond B, both of

You want to invest in a bond for one year, and are deciding between the following two choices Bond A and Bond B, both of which have a maturity of 1 year and a par value of $1,000. Bond A is a regular (i.e., nominal-return) with a coupon rate of 3% per year, payable semi-annually. The current price of Bond A is $998. Bond B is a real-return bond with a coupon rate of 2% per year, payable annually. The current price of Bond B is $1,000. What is the inflation rate (over the next year) that will make the (nominal) rates of return of the two choices the same?

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