By Marks Buys a One-Year German Government Bond (Called a Bund)for

Multiple Choice

By Marks buys a one-year German government bond (called a bund) for $400.He receives principal and interest totaling $436 one year later.During the year the CPI rose from 150 to 162,but he had thought the CPI would be at 159 by the end of the year.By Marks had expected the real interest rate to be ________,but it actually turned out to be ________.

A) 8%; 1%
B) 6%; 3%
C) 3%; 1%
D) 1%; 3%