1. A bond that pays interest annually yields a rate of return of 7.25 percent. The inflation rate for the same period is 3 percent. What is the real rate of return on this bond? 1.04 percent 2.42 percent 3.00 percent 4.13 percent 10.25 percent

2. The Lo Sun Corporation offers a 5.1 percent bond with a current market price of $746.50. The yield to maturity is 8.58 percent. The face value is $1,000. Interest is paid semiannually. How many years is it until this bond matures? 29.27 years 23.35 years 11.68 years 5.84 years 22.39 years