Part 1: A bond that pays interest annually yielded 7.00 percent last year. The i

Question

Part 1: A bond that pays interest annually yielded 7.00 percent last year. The inflation rate for the same period was 5.80 percent. What was the actual real rate of return on this bond for last year? A) 1.26 percent B) 5.80 percent C) 1.20 percent D) 5.87 percent E) 1.13 percent Part 2: The outstanding bonds of Winter Time Products provide a real rate of return of 3.70 percent. The current rate of inflation is 2.10 percent. What is the nominal rate of return on these bonds? 5.80 percent 5.88 percent 5.82 percent 5.86 percent 5.90 percent

Explanation / Answer

B) 5.80 percent

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