Nominal rate on investment

Reference no: EM13762349

1. If the current inflation rate is 4.2% and you are earning a real rate of return on an investment of 3.8%, then the nominal rate on this investment is closest to:

3.8%
4.2%
8.0%
8.2%

2. If an investment providing a nominal return of 12.25% only offers a real rate of return of 5.70%, then the inflation rate is closest to:

5.70%
6.20%
6.55%
12.25

3. Suppose a five- year bond with a 7% coupon rate and semiannual compounding is trading for a price of $951.58. Expressed as an APR with semiannual compounding, this bonds yield to maturity (YTM) is closest to:

7.0%
7.5%
7.8%
8.2%

4. Use the following information to answer the question(s) below. A default-free security has an annual coupon rate of 3.25% and sells for par. This bond will mature in:

1 year
2 years
3 years
4 years

Reference no: EM13762349

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