Suppose You Bought a 10 Percent Coupon Bond One Year

Multiple Choice

Suppose you bought a 10 percent coupon bond one year ago for $950.The face value of the bond is $1,000.The bond sells for $985 today.If the inflation rate last year was 9 percent,what was your total real rate of return on this investment?

A) -4.88 percent
B) -5.32 percent
C) 4.78 percent
D) 9.78 percent
E) 10.47 percent