This Question 1 pt 15 of 33 0 complete This Test 33 pts poss

This Question: 1 pt 15 of 33 (0 complete) This Test: 33 pts poss EQuestion Help Man-zeer Inc. (a Kramer/Costanza joint venture) bonds are currently trading at $1,711.74. The bonds have a face value of $1,000, a coupon rate of 11 % with coupons paid semiannually, and they mature in 25 years, what is the yield to maturity of the bonds? The yield to maturity of the bonds is (Round to two decimal places.)

Solution

Nominal rate of interest = real rate of interest + inflation rate

12.31% = 7.73% + inflation rate

Inflation rate = 12.31%-7.73% = 4.58%

Inflation rate = 4.58%