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please solve Q2 in 50 minutes I will give you thumb up Question 2 (19 points): On 1.1.2022, Good Company Inc. issued a zero coupon,
please solve Q2 in 50 minutes I will give you thumb up
Question 2 (19 points): On 1.1.2022, "Good Company Inc." issued a zero coupon, non-index linked (nominal), 4-year bond, with a face value of $100. Assume that the YTM on similar bonds in the market is 5%, and the expected annual inflation rate at the time of issuing was 3% a year. b. Suppose that two years later (on 1.1.24), the bond was trading for $95. It is known that at that time, the expected annual inflation rate was 2% a year. The following table presents data regarding the consumer price index at different points in time: What is the effective annual rate of return (nominal and real) for an investor who bought the bond at its issuance, and sold it on 1.1.2024 ? c. Consider an investor that bought the bond on 1.1.24. What will be his annual real effective rate of return if he holds the bond until maturityStep by Step Solution
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