What is the inflation year over this year

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Reference no: EM13158228

Assume an investor purchases a $1,000 bond on January 1, 2013 that pays $50 on January 1, 2014. The CPI increases from 220 in 2013 to 224.4 in 2014.

a. What is the inflation year over this year?

b. What nominal or money interest rate would the investor receive?

c. What would be the investor%u2019s real or inflation adjusted interest rate?

d. What would the investor%u2019s real interest rate be if inflation were 6%?

Reference no: EM13158228

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