Suppose you bought a 10 percent coupon bond one year ago for $950. The face value of the bond is $1,000. The bond sells for $985 today. If the inflation rate last year was 9 percent, what was your total real rate of return on this investment?
Answer
a.
-5.32 percent
b.
-4.88 percent
c.
10.47 percent
d.
9.78 percent
e.
4.78 percent