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A 10-year, capital-indexed bond linked to the Consumer Price Index (CPI) is issued with an annual coupon rate of 6% and a par (face) value
A 10-year, capital-indexed bond linked to the Consumer Price Index (CPI) is issued with an annual coupon rate of 6% and a par (face) value of $2,000. The bond accrues and pays interest (coupon) semi-annually. During the first six months after the bonds issuance, the CPI increases by 2%. Evaluate bonds price (here, present value or possible price) at a market annual discount rate of 5% and on the second coupon payment date.
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