Final answer:
The real rate of return on a bond with a yield to maturity of 3.89% and an inflation rate of 1.48% is 2.41%, which is calculated by subtracting the inflation rate from the yield to maturity.
Step-by-step explanation:
When you have a bond with a yield to maturity of 3.89 percent and an inflation rate of 1.48 percent, you can calculate the real rate of return using the Fisher Equation, which adjusts nominal yields for inflation to find the real return. The real rate of return is approximately calculated as the nominal rate (yield to maturity) minus the inflation rate.
The real rate of return on the bond is therefore calculated as:
Real Rate of Return = Yield to Maturity - Inflation Rate
= 3.89% - 1.48%
= 2.41%
So, the real rate of return on the bond is 2.41%.