The price of a 10-year $100 par zero coupon inflation-indexed bond is $89.51.

| September 7, 2016

Question
Here’s my question:
Consider these long-term investment data:

• The price of a 10-year $100 par zero coupon inflation-indexed bond is $89.51.

A real-estate property is expected to yield 2% per quarter (nominal) with a SD of the (effective) quarterly rate of 10%.

a.
Compute the annual rate on the real bond

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