A man bought a government bond which cost P1000 and will pay P50 interest each year for 20 years. The bond will mature at the end of 20 years and he will receive the original P1000. If there is a 2% annual inflation during this period, what rate of return will the investor receive after considering the effect of inflation?

A man bought a government bond which cost P1000 and will pay P50 interest each year for 20 years. The bond will mature at the end of 20 years and he will receive the original P1000. If there is a 2% annual inflation during this period, what rate of return will the investor receive after considering the effect of inflation?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 4P

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