3) a) A government bond pays %20 annual coupon interest however the coupon payments are paid...
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3) a) A government bond pays %20 annual coupon interest however the coupon payments are paid semi-annually. Par value: 100 TL, and the remaining maturity is 3 years. Find the price of this bond when the market interest rate is %18. If you buy this bond at the price that you calculated and hold to maturity, what is your ytm (annual)? Is this ytm fixed and certain? Explain briefly. b) The current one year government bond in TL of Turkey is yielding at 12%. If you buy this bond and hold it to maturity and expected inflation for the next year is %45, would you make real rate of return? 3) a) A government bond pays %20 annual coupon interest however the coupon payments are paid semi-annually. Par value: 100 TL, and the remaining maturity is 3 years. Find the price of this bond when the market interest rate is %18. If you buy this bond at the price that you calculated and hold to maturity, what is your ytm (annual)? Is this ytm fixed and certain? Explain briefly. b) The current one year government bond in TL of Turkey is yielding at 12%. If you buy this bond and hold it to maturity and expected inflation for the next year is %45, would you make real rate of return?
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Answer rating: 100% (QA)
a To calculate the price of the bond we need to determine the present value of the future cash flows ... View the full answer
Related Book For
Economics Principles and Policy
ISBN: 978-0538453653
12th edition
Authors: William J. Baumol, Alan S. Blinder
Posted Date:
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