6. An investment company offers a bond linked to the FT100 index. On redemption the bond pays...

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6. An investment company offers a bond linked to the FT100 index. On redemption the bond pays the face value plus the larger of

(a) the face value times the change in the index or

(b) 5 percent yearly interest compounded monthly. For example, 100 invested when the index was 110 and redeemed a year later when the index was 125 will pay

(a) 100 + 100 * (125 − 110)/110= 113.636 and not

(b) 100 * (1 + 0.05/12)^12 = 105.116.

Implement a VBA function Bond(Deposit, Years, FT0,FT1)

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Financial Modeling

ISBN: 9780262024822

2nd Edition

Authors: Simon Benninga

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