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QUESTION
1.1. Suppose that you buy a two-year 8% bond at its face value. a) What will be your nominal return over the two years if inflation is 3% in the
1.1. Suppose that you buy a two-year 8% bond at its face value.a) What will be your nominal return over the two years if inflation is 3% in the first yearand 5% in the second? What will be your real return?b) Now suppose that the bond is a TIPS. What will be your real and nominal return?
1.1. Suppose that you buy a two-year 8% bond at its face value.a) What will be your nominal return over the two years if inflation is 3% in the first yearand 5% in the second? What will be your...