Hi Bartleby Expert, I'm struggling a bit with real returns, and i was hoping to receive a bit of assistance! The given information is as follows: Peter needs to build a hotel, the amount required for the building is 4 billion dollars. Note that he is only going to use one type of bond and not a portfolio.
Hi Bartleby Expert,
I'm struggling a bit with real returns, and i was hoping to receive a bit of assistance!
The given information is as follows:
Peter needs to build a hotel, the amount required for the building is 4 billion dollars. Note that he is only going to use one type of bond and not a portfolio.
Assume Peter receives the amount needed for the construction on January 1st 2022. All the bonds that Peter issues carry an annual interest rate (or yield) of 1.7%
Peter also details the plans of launching two green mutual funds to fund the full-scale environmental projects of Quahog. The two green mutual funds christened as “Green Chris” and “Green Stewie” have an expected return of 4% and 2.5%, respectively, in nominal terms. The inflation rate is 2%.
The question:
What are the expected real returns on both of the green funds?
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