Bond date of maturity-what is the real interest rate

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Suppose the discount rate is 5 percent and a bond promises to pay $200 per year for 10 years starting in one year and $800 at the date of maturity. What will be the price of the bond today? If the discount rate remains constant, what will be the price of the bond in 5 year’s time? Please show and explain.

If the nominal interest rate is 4 percent and expected inflation is 1 percent, what is the real interest rate? Please show your work. Suppose instead that the nominal interest rate is 80 percent and the expected inflation rate is 40 percent.

Reference no: EM13847174

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