If the inflation rate was 37 percent over the past year


You bought one of Rocky Mountain Manufacturing Co.’s 8.5 percent coupon bonds one year ago for $1,051.30. These bonds make annual payments and mature eleven years from now. Suppose that you decide to sell your bonds today, when the required return on the bonds is 8 percent. If the inflation rate was 3.7 percent over the past year, what would be your total real return on investment?

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Financial Management: If the inflation rate was 37 percent over the past year
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