A Bond That Pays Interest Annually Yields a 7

question 52

Multiple Choice

A bond that pays interest annually yields a 7.25% rate of return. The inflation rate for the same period is 3.5%. What is the real rate of return on this bond?

• A) 3.50%
• B) 3.57%
• C) 3.62%
• D) 3.72%
• E) 3.75%

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Definitions:

Cerebrovascular Accident

Medical terminology for a stroke, a condition arising from the interruption or reduction of blood supply to the brain, leading to neurological deficits.

Weakness

Weakness is the lack of physical or muscular strength, or the feeling of being unable to exert force or perform physical tasks as usual.

Spastic Hemiparesis

A condition characterized by weakness or paralysis (paresis) on one side of the body accompanied by involuntary muscle contractions (spasticity).

Cerebrovascular Accident

Another term for a stroke, a medical condition where poor blood flow to the brain results in cell death, causing possible long-term disability or death.