On July 1, 2014, The Govemment of Canada issues a 30-year real return bond with a 4.5% semi-annual coupon. The consumerprice index (CPI) on that date is 103.15. What is the face value and coupon payment on this bond on July 1, 2017, if the CPI onthat date is 109.37?O A. face value $1031.50; coupon payment $23.21DB. face value $1093.70; coupon payment $23.86DC. face value $1060.30; coupon payment $23.86OD. face value $1093.70; coupon payment $24.61DE. face value $1060.30; coupon payment $24.61

Solution:- Consumer Price Index (CPI) is an indicator of the inflation in the economy.

On July 1, 2014, The Govemment of Canada issues a 30-year real return bond with a 4.5% semi-annual coupon. The consumen price index (CPI) on that date is 103.15. What is the face value and coupon payment on this bond on July 1, 2017, if the CPI on that date is 109.37? A. face value $1031.50; coupon payment $23.21 OB. face value $1093.70; coupon payment $23.86 DC. face value $1060.30; coupon payment $23.86 OD. face value $1093.70; coupon payment $24.61 DE. face value $1060.30; coupon payment $24.61

On July 1, 2014, The Govemment of Canada issues a 30-year real return bond with a 4.5% semi-annual coupon. The consumen price index (CPI) on that date is 103.15. What is the face value and coupon payment on this bond on July 1, 2017, if the CPI on that date is 109.37? A. face value $1031.50; coupon payment $23.21 OB. face value $1093.70; coupon payment $23.86 DC. face value $1060.30; coupon payment $23.86 OD. face value $1093.70; coupon payment $24.61 DE. face value $1060.30; coupon payment $24.61

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 22P

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