What nominal rate would you require from bank over next year

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1. What is the price of a perpetuity that has a coupon of $50 per year and a YTM of 2.5% ? If the YTM doubles, what would happen to its price?

2. Assume you just deposited $1,000 into bank account. The current real IR is 2%, and inflation is expected to be 6% over the next year. What nominal rate would you require from the bank over next year? How much money would have at the end of the one year?

Reference no: EM13737023

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