1. (a) Explain the meaning of the following interest rate concepts (short explanation): i. Spot-interest rate,...

 

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1. (a) Explain the meaning of the following interest rate concepts (short explanation): i. Spot-interest rate, 2p ii. Forward interest rate, 2p iii. Implicit forward interest rate, 2p iv. "Yield-to-maturity", 2p v. Effective interest rate, 2p (b) Explain (briefly) the difference between: i. Coupon bonds and Zero-coupon bonds, 3p ii. Fixed-rate bonds and Floating-rate bonds, 3p iii. Nominal bonds and Real bonds, 4p. 1. (a) Explain the meaning of the following interest rate concepts (short explanation): i. Spot-interest rate, 2p ii. Forward interest rate, 2p iii. Implicit forward interest rate, 2p iv. "Yield-to-maturity", 2p v. Effective interest rate, 2p (b) Explain (briefly) the difference between: i. Coupon bonds and Zero-coupon bonds, 3p ii. Fixed-rate bonds and Floating-rate bonds, 3p iii. Nominal bonds and Real bonds, 4p.

Answer rating: 100% (QA)

i The spot interest rate is the interest rate that is current at the present time This rate is used to price short term financial instruments such as ... View the full answer