A consol is a perpetual bond that pays coupons forever, without repaying the principal. Consider a standardized
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A consol is a perpetual bond that pays coupons forever, without repaying the principal. Consider a standardized consol, issued today at t = 0, with annual coupon payments c. Show that the relation
between price and yield to (average) maturity holds.
CouponA coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...
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The price of a consol B0 t can be expressed as the present value of all future coupon pay...View the full answer
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