Today Katerina purchased a bond at a quoted price of 98.7. The bond matures in five years, pays semi-annual interest, and has a 6.5% coupon rate. If Katerina holds the bond to maturity, what real rate of return will she earn if inflation remains constant at 2%?
A) 4.72%
B) 4.81%
C) 6.52%
D) 6.72%
E) 6.81%
Correct Answer:
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