You Just Bought a Bond with a Yield to Maturity

question 103

Multiple Choice

You just bought a bond with a yield to maturity of 9.5%.If the rate of inflation is expected to be 4%,what is the real return on your investment?

• A) 9.50%
• B) 5.29%
• C) 4.00%
• D) Not enough information.

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Definitions:

Delayed Credit

A bookkeeping entry signifying credits that will be applied to a customer's account at a future date, affecting future billing cycles rather than immediate revenues.

Delayed Charge

A transaction that records an expenditure which will be billed to a client or customer at a future date, not immediately impacting cash flow.

Pending Expense

Expenditures that have been incurred but not yet fully processed or paid out.

Sales Transaction

A business operation where goods or services are exchanged for money between the seller and the buyer.