Question: 4. (9 points) Suppose a discount bond with face value of $1000 and maturity of four years currently trades for price $860. a. (2 pts)

4. (9 points) Suppose a discount bond with face value of

4. (9 points) Suppose a discount bond with face value of $1000 and maturity of four years currently trades for price $860. a. (2 pts) What is the yield to maturity on this bond? b. (2 pts) Suppose the inflation rate over the next four years is expect to average 2% per year. What is expected purchasing power of the face value of the security in current dollars? c. (2 pts) What is the real interest rate

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