During a period of severe inflation, a bond offered a nominal HPR of 80% per year. The

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During a period of severe inflation, a bond offered a nominal HPR of 80% per year. The inflation rate was 70% per year.

a. What was the real HPR on the bond over the year?

b. Compare this real HPR to the approximation r =R – i.

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ISBN: 9780073530703

9th Edition

Authors: Zvi Bodie, Alex Kane, Alan J. Marcus

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Question Posted: Jan 04, 2013 08:10 AM

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During a period of severe inflation, a bond offered a nominal HPR of 80% per year. The

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