Suppose you buy in September of 2023 a $1,000 government bond that expires in March of 2024. The bond promises 5.57% in interest rate annually. Expected inflation is calculated to be about 2.4% in March. What would be your real return on this bond?

Essentials Of Investments
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Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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Suppose you buy in September of 2023 a $1,000 government bond that expires in March of 2024. The bond promises 5.57%
in interest rate annually. Expected inflation is calculated to be about 2.4% in March. What would be your real return on this
bond?
Transcribed Image Text:Suppose you buy in September of 2023 a $1,000 government bond that expires in March of 2024. The bond promises 5.57% in interest rate annually. Expected inflation is calculated to be about 2.4% in March. What would be your real return on this bond?
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