Problem
You just learned that a well-established company will issue a bond with a matu- rity of 100 years. The bond appears to be a good deal because it yields 10.71 per- cent. Assuming that the inflation rate stays at 3.34 percent, what is the bond's real rate of return today? If you are looking for a bond to purchase and hold for several years, will you buy this bond? Explain your answer in terms of future inflation projections and the length of the bond's maturity.