A bond has 8 years until maturity, a coupon rate of 8%, and sells for $1,100. a.
Question:
A bond has 8 years until maturity, a coupon rate of 8%, and sells for $1,100.
a. If this bond has a yield to maturity of 8% 1 year from now, what will its price be?
b. What will be the rate of return on the bond?
c. If the inflation rate during the year is 3%, what is the real rate of return on the bond?
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Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...
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Related Book For 
Fundamentals of Corporate Finance
ISBN: 978-0078034640
7th edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus
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