You will receive $100 from a zero-coupon savings bond in 4 years. The nominal interest rate...

You will receive $100 from a zero-coupon savings bond in 4 years. The nominal interest rate is 8.80%.

a. What is the present value of the proceeds from the bond?

b. If the inflation rate over the next few years is expected to be 3.80%, what will the real value of the $100 payoff be in terms of today’s dollars?

c. What is the real interest rate?

Expert Solution

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jeff jeffy answered 1 year ago

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