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Question : Suppose that you buy a two-year 7.5% bond at its : 5193

Suppose that you buy a two-year 7.5% bond at its face value.

What will be your nominal return over the two years if inflation is 2.5% in the first year and 4.5% in the second? **(Do not round intermediate calculations. Round your answer to 2 decimal places.)**

What will be your real return? **(Do not round intermediate calculations. Round your answer to 2 decimal places.)**

Suppose that the bond is a TIPS. What will be your real and nominal returns? **(Do not round intermediate calculations. Round your answers to 2 decimal places.)**

Suppose that you buy a two-year 7.5% bond at its face value. |