Final answer:
The rate of inflation is 5.24 percent.
Step-by-step explanation:
Inflation is the rate at which the general level of prices for goods and services in an economy is rising over time, leading to a decrease in the purchasing power of a currency. In other words, inflation reflects the percentage increase in the average price level of a basket of selected goods and services over a specified period.
The rate of inflation can be calculated by subtracting the real rate of return from the yield to maturity. In this case, the yield to maturity is 8.46 percent and the real rate of return is 3.22 percent. Subtracting 3.22 percent from 8.46 percent gives us a rate of inflation of 5.24 percent.