Suppose that you buy a two-year 7.5% bond at its face value. a-1. What will...
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Suppose that you buy a two-year 7.5% bond at its face value. a-1. What will be your total 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. Enter your answer as a percent rounded to 2 decimal places.) Nominal return % a-2. What will be your total real return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Real return % b. Now suppose that the bond is a TIPS. What will be your total 2-year real and nominal returns? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) % Real return Nominal return %
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