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A 6-year bond is issued paying coupons annually in arrears at the rate of 10% p.a. and is redeemed at the rate of 102%. Investor
A 6-year bond is issued paying coupons annually in arrears at the rate of 10% p.a. and is redeemed at the rate of 102%. Investor A purchases 500 nominal of the bond so as to obtain an annual real yield of 4% p.a. on the assumption that inflation is 2% p.a. over the entire 6-year term. Calculate the price at which Investor A purchased the bond.
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