You just bought a bond with a yeild to maturity of 9.5%. If the rate of inflation is expected to be 4%, what is the real return on your investment?
You rate of return is still 9.5. If by asking about about “real return” you would just deduct the 4% from your yield of 9.5%, however if you are figuring it as to actual gain after expenses at the very least you would also have to deduct any costs {if any} involved in the buying and the sellin of the bond and also your federal and state tax rate if they apply.
