Question

"Consider the following information for a period of years: Series Arithmetic Mean Long-term corporate bonds 6.3 % Long-term government bonds 6.2 Inflation 3.3 What is the real return on long-term government bonds

Answer 1

The real return on long-term government bonds is 2.80%

Step-by-step explanation:

In order to calculate the Real Return on long-term government bonds according to the given data we would have to make the following calculation:

Real Return on long-term government bonds= (1 +0.062) / (1 +0.033) – 1

Real Return on long-term government bonds = 1.062 / 1.033– 1

Real Return on long-term government bonds = 2.80%

The real return on long-term government bonds is 2.80%