Real rate of return including the factor of inflation

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Reference no: EM13917240

Assume you have purchase a 10 year bond, which offers a nominal rate of return of 14%. You would like to know the real rate of return including the factor of inflation. You are not sure what the exact inflation rate will be over the next 10 yeast but by research you have done you are assuming it will be somewhere between 1.5% and 5 %, so you decide to calculate the real rate of return based on the following scenarios. Assume a 1.5% inflation rate, what is the real rate of return? Assuming a 3% inflation rate, what is the real rate of return? Assuming a 5% inflation rate, what is the real rate of return?

Reference no: EM13917240

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