Assuming you have an inflation linker that pays an annual coupon of 2.5% every half a year and the real yield is 3%. What will be the price of the if it matures after 3.5 if you assume that the total inflation during this period was 5.5% ? Assume the principal is 100. Hint: Find the price without the inflation and then apply the adjustment as we did in class 103.76 98.35 102.76 104.2
Assuming you have an inflation linker that pays an annual coupon of 2.5% every half a year and the real yield is 3%. What will be the price of the if it matures after 3.5 if you assume that the total inflation during this period was 5.5% ? Assume the principal is 100. Hint: Find the price without the inflation and then apply the adjustment as we did in class 103.76 98.35 102.76 104.2
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 26P
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Assuming you have an inflation linker that pays an annual coupon of 2.5% every half a year and the real yield is 3%. What will be the price of the if it matures after 3.5 if you assume that the total inflation during this period was 5.5% ? Assume the principal is 100.
Hint: Find the price without the inflation and then apply the adjustment as we did in class
103.76
98.35
102.76
104.2
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