What does your partner believe the inflation rate

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Problem -

a) An investment offers a 10.7% total (nominal) return over the coming year. And if your partner thinks the total real return on this investment will be only 6.75%. What does your partner believe the inflation rate will be over the next year?

b) Maroon Two Inc. has just issued bonds with face value of $1,000 each, coupon rate of 9%, semi-annual coupon payment, and maturity of 10 years. What is the price of the bond if the current yield on similar bonds in the market is 8.5%? (The coupon rate and the YTM are compounded semi-annually)

Reference no: EM132904133

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