Question: A bond has 10 years until maturity, a coupon rate of 7.9%, and sells for $1,110. Interest is paid annually. (Assume a face value
A bond has 10 years until maturity, a coupon rate of 7.9%, and sells for $1,110. Interest is paid annually. (Assume a face value of $1,000.) a. If the bond has a yield to maturity of 10.1% 1 year from now, what will its price be at that time? Note: Do not round intermediate calculations. Round your answer to nearest whole number. Price b. What will be the rate of return on the bond? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign. Rate of return % c. If the inflation rate during the year is 3%, what is the real rate of return on the bond? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign. Real rate of return %
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