Looking for bond to purchase and hold for several years

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These problems are available in MyFinanceLab. You just learned that a blue chip company will issue a bond with a maturity of 100 years. The bond appears to be a good deal because it yields 8. 5 percent. Assuming that the inflation rate stays at 4 percent, what is the bond's real rate of return today? If you were looking for a bond to purchase and hold for several years, would you buy this bond? Explain your answer in terms of future inflation projections and the length of the bond's maturity.

Reference no: EM131886242

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