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If a Bond's Coupon Adjusts to Pay a Constant Real

Question 104

Multiple Choice

If a bond's coupon adjusts to pay a constant real rate of return,then an increase in inflation would cause


A) the nominal coupon payment to rise.
B) the nominal coupon payment to fall.
C) the nominal coupon payment to remain unchanged.
D) the bond's price to fluctuate wildly.

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