Nominal interest rate is yield to maturity for given bond
470=500/(1+r)
1+r=500/470
Nominal Interest Rate=0.0638=6.3829%
Expected inflation rate=2%
Real Interest Rate=Nominal Interest Rate-Inflation Rate=6.3829%-2%=4.3829%
6. A one-year risk free bond with a face value of $500 has a price of...
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