Suppose that you buy a 1-year maturity bond with a coupon of 7.2% paid annually. If you buy the bond at its face value, what real rate of return will you earn if the inflation rate is 2%? 4%? 8.30%? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign.)

Explanation:

The Real rate of return would be calculated as:

= (1 + Coupon rate)/(1 + Inflation rate) - 1

a. When inflation rate = 2%

Coupon rate = 7.2%

= (1+7.2%) / (1+2%) -1

= (1 + 0.072) / (1 + 0.02) - 1

= 5.10%

b. When inflation rate = 4%

= (1+7.2%) / (1+4%) -1

= (1 + 0.072) / (1 + 0.04) - 1

= 3.08%

3) When inflation rate = 8.30%

= (1+7.2%) / (1+8.3%) -1

= (1 + 0.072) / (1 + 0.083) - 1

= -1.02%

income statement is prepared in order to show the profits and loss of a business. in order to prepare the income statement she should collect all the income and expenses of the product with the cost of production.

muslims control the north africa during the period of 1500 up

to 1800. they made a barrier to prevent further european exploration from

entering the africa from the north. however, the dutch ware still able to move

toward the interior with having south africa as one of the routes leading to

the east for trading with asia.