Question
You buy an inflation-adjusted treasury bond on June 15 2005. The face value of the bond is$5000. The bond is selling at par, with a
payments. The bond has a maturity of 5 years. You expect the inflation to be 2% per year. What will be the nominal dollar amount of the coupon you receive on June 15 2008?
Note : in calculating multi-year inflation, you can use discrete compounding at the annual frequency.
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Personal Finance
Authors: Thomas Garman, Raymond Forgue
12th edition
9781305176409, 1133595839, 1305176405, 978-1133595830
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