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(b) A money market security has a par value of 10,000 and is expected to mature in 182days. Investors require 15%. Calculate the present value
(b) A money market security has a par value of 10,000 and is expected to mature in 182days. Investors require 15%. Calculate the present value of this money market instrument (4 marks) (c) The data below relates to XYZ economy: Nominal interest rate =18% Inflation =5.5% Real interest rate = ? (i) What is the difference between nominal interest rate and real interest rate? (2marks) (ii) From the given data (XYZ Company), determine the real interest rate using Irving fisher's classical approach. (2marks) (d) Outline three (3) basic functions of derivatives in the financial market (6marks) (Total= marks 20)
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