Business, 19.02.2021 03:10, Drea1385

Suppose you buy an inflation-indexed bond that will adjust with inflation and thus pay you $1,500 in real (inflation-adjusted) terms each year for the next five years, plus your real principal of $75,000 at the end of the fifth year. The nominal interest rate is 5 percent and the expected inflation rate is 2 percent. What is the present value of the bond

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Suppose you buy an inflation-indexed bond that will adjust with inflation and thus pay you $1,500 in...