Question: The US Treasury issues a bond with the following features Face Value = $1,000 Maturity 7 years Coupon Rate 4% The bond's cash-flows are in

The US Treasury issues a bond with the following features Face Value = $1,000 Maturity 7 years Coupon Rate 4% The bond's cash-flows are in Nominal terms. Coupons are paid annually You would like to earn 2% in real terms. If you expect inflation to be 5% how much would you pay for the bond?

$833.51

$850.18

$838.32

$855.09

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