Question
I received an answer on the following question that i didn't get: The Polish government is about to issue a new 10-year sovereign bond. According
I received an answer on the following question that i didn't get:
The Polish government is about to issue a new 10-year sovereign bond. According to financial specialists, investors will require a 5% return on their investment in this bond, whereas investors require only a 2% return on a German government bond with the same characteristics. However, an employee in the Ministry of Finance suggests that Poland should change its public debt estimation method. As a result of this reform, nothing would change in the Polish economy apart from the reported level of public debt. According to the Ministry of Finance, investors would require a lower return on the 10-year Polish bond, if the new public debt, estimated with the new method, is lower.
Do you agree?
The answer:
Could another please try answering the question, in another way or further clarify the answer above. Thanks in advance!
introduction A soverign boud is a dubt secinty ulveh will be issued by a national gover ment in order to raied money far - Prancing government progoams. Explanation Bond =10 year soveng n bond. Total retus =2% (german) But the total Retur on the bask Strategy will be = 5\% retur on the miestmout . So, for example if the bond price is 1000 . and the vetin requined =57. a but the german netur gap=(52)=3% So, the compensation from the poland bond P.T.O; Bond yelld fermulce =Boudpreo.AnualCouponpayment =10003%=10093%=0.03. Tucr are different stralegies on the basis of winch tue efficaey will be leaduef towords mens poland yel1d for implication af 3%. introduction A soverign boud is a dubt secinty ulveh will be issued by a national gover ment in order to raied money far - Prancing government progoams. Explanation Bond =10 year soveng n bond. Total retus =2% (german) But the total Retur on the bask Strategy will be = 5\% retur on the miestmout . So, for example if the bond price is 1000 . and the vetin requined =57. a but the german netur gap=(52)=3% So, the compensation from the poland bond P.T.O; Bond yelld fermulce =Boudpreo.AnualCouponpayment =10003%=10093%=0.03. Tucr are different stralegies on the basis of winch tue efficaey will be leaduef towords mens poland yel1d for implication af 3%Step by Step Solution
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