The third investment proposal is a bond issued by Demeter Corp. The private banker has laid down
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The third investment proposal is a bond issued by Demeter Corp. The private banker has laid down a base scenario to help you determine the total real return on this investment. You will buy the bond today for a clean price of $1,035.00. The bond makes annual coupon payments of 6.5 percent and matures in 10 years. You will sell the bond one year from now when the required return on the bonds will be forecast to be 6.2%. Assume the inflation rate over this coming year is 2.5%.
Calculate what would be your total real return on investment for the Demeter Corp.
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