Question
5. Suppose Catalonia enforces its independence from Spain. This will promote a lot of discussion about the future of Catalan economy. The table below shows
5. Suppose Catalonia enforces its independence from Spain. This will promote a lot of discussion about the future of Catalan economy. The table below shows the prices and maturities of Barcelonas zero-coupon bonds (each bond has the face value of 1000):
| Maturity(years) | Current Price |
|---|---|
| 1 | 970.87 |
| 3 | 889.00 |
| 5 | 783.53 |
| 10 | 508.35 |
| 20 | 178.43 |
a. Plot the yield curve for the Catalan debt.
b. Do you think that the future of independent Catalonias economy is optimistic, neutral or pessimistic? Please base your answer on the shape of the yield curve that you have plotted.
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Extinction Governance Finance And Accounting
Authors: Jill Atkins, Martina Macpherson
1st Edition
0367492989, 978-0367492984
