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Q3) Government of Pakistan decides to issue 3 year bond. The data which their analyst gave them are as follows: (4) Inflation premium = 3%

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Q3) Government of Pakistan decides to issue 3 year bond. The data which their analyst gave them are as follows: (4) Inflation premium = 3% Reinvestment risk = 2% a) Calculate the coupon rate which government should offer to the bond holder. b) Why are certain premiums required for calculating bond coupon rate of private bonds but are not applicable in calculation of govt bond

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