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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? Answer: The nominal effective annual rate of return is The real effective annual rate of return is c. Consider an investor that bought the bond on 1.1.24. What will be his annual real effective mos af raturn if ha holdo tha houd wontil motwritus 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? Answer: The nominal effective annual rate of return is The real effective annual rate of return is c. Consider an investor that bought the bond on 1.1.24. What will be his annual real effective mos af raturn if ha holdo tha houd wontil motwritusStep by Step Solution
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