Along with the crash in the real estate and financial markets, 2008 also was a period of above average inflation. The inflation rate was 5.6% for the 12 months ending June 2008. At the same time, the yield of the US Treasury bond was at 4.53%. Did you notice that the real rate was negative? This means that an investment in a 30-year US Treasury Bond was not even yielding enough to cover the increase in prices. What was the real return on the 30-year T-bond during that time? Convert your answer to a percent but enter numbers only in your response.

Along with the crash in the real estate and financial markets, 2008 also was a period of above average inflation. The inflation rate was 5.6% for the 12 months ending June 2008. At the same time, the yield of the US Treasury bond was at 4.53%. Did you notice that the real rate was negative? This means that an investment in a 30-year US Treasury Bond was not even yielding enough to cover the increase in prices. What was the real return on the 30-year T-bond during that time? Convert your answer to a percent but enter numbers only in your response.

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter9: Forecasting Exchange Rates

Section: Chapter Questions

Problem 4ST

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