Consider the 20-year Republic of India government bond from which the discount bond in Example 1 was
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Consider the 20-year Republic of India government bond from which the discount bond in Example 1 was separated (or stripped). The bond was issued at an annualized coupon rate of 6.70 percent and a YTM of 6.70 percent, and the coupon payments are semiannual.
1. Solve for the price of the bond at issuance.
2. What is the bond’s price if the YTM immediately rises to 7.70 percent?
3. Recalculate the discount bond price for the final principal payment in 20 years from Example 1 using a 6.70 percent semiannual discount rate.
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1 INR100 As coupon periods are semiannual for a principal of INR100 PMT INR335 6702 a...View the full answer
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