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QUESTION

A bond is currently selling at 1.15 on its par value of $1,000. This bond has a maturity of 15 years and a coupon rate of 5%, payable semi-annually.

A bond is currently selling at 1.15 on its par value of $1,000. This bond has a maturity of 15 years and a coupon rate of 5%, payable semi-annually. If the inflation rate is 3%, what is the real yield on this bond?                                  

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