Problem
Suppose you purchase a $5,000 bond that pays 7 percent interest annually and matures in five years. If the inflation rate in recent years has been steady at 3 percent annually, what is the estimated real rate of interest? If the inflation rate during the next five years remains steady at 3 percent, what real rate of return will you earn? If the inflation rate during the next five years is 6 percent, what will happen to your real rate of return?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.