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The following table gives annual, end of year prices of a bond and of the consumer prices index. year bond value CPI value 2006 36.9
The following table gives annual, end of year prices of a bond and of the consumer prices index.
year | bond value | CPI value |
2006 | 36.9 | 108.0 |
2007 | 39.8 | 110.3 |
2008 | 42.4 | 113.6 |
2009 | 38.1 | 116.1 |
2010 | 36.4 | 118.4 |
2011 | 39.2 | 120.9 |
2012 | 44.6 | 123.2 |
2013 | 45.1 | 125.4 |
(a) Calculate the simple returns. (b) Calculate the continuously compounded returns (log return). (c) Calculate the prices of the bond each year in 2013 terms.
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