All bonds today have a nominal value of 500 darkos per. PCS. Table 1 shows the current
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Question:
All bonds today have a nominal value of 500 darkos per. PCS.
Table 1 shows the current prices and effective annual interest rates for risk-free government bonds with a payment profile corresponding to standing loans.
Table 1: Selected "zero coupon bonds" of the type of standing loans (rounded entries)
Maturity (years) Market price today (darkos) Effective annual interest rate
Question(s):
Determine (i) the year's yield on a 2-year risk-free bond with a nominal value of 500 darkos, a nominal annual interest rate of 10% and a payment profile as an annuity loan, and (ii) the current rate for such a bond
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