1. The nominal rate of return on the bonds of Stu's Boats is 10.25 percent. The real rate of return is 3.0 percent. What is the rate of inflation?
5.13 percent
3.42 percent
7.04 percent
7.25 percent
6.63 percent
2. A zero coupon bond with a face value of $1,000 is issued with an initial price of $455.50. The bond matures in 18 years. What is the implicit interest, in dollars, for the first year of the bond's life? Use semiannual compounding.
$11.06
$10.17
$20.34
$12.19
$6.09