Question: (b) State the difference between nominal rate and real rate. An investment offers a 17.5% total return over the coming year. However, a financial analyst

(b) State the difference between nominal rate and real rate. An investment offers a 17.5% total return over the coming year. However, a financial analyst thinks that the real return is only 11%. What is the anticipated inflation rate?(5 marks)

(c) Define the following for a bond: (a) Coupon (b) Face value (c) Coupon rate (d) Maturity date (e) Yield to Maturity (YTM) Explain how coupon rate and YTM affect the bonds par value. (7 marks)

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