Consider an investor who purchases a Treasury inflation-indexed note with an original principal amount of $100,000, a 2.875 percent annual coupon rate (coupon is paid semiannually), and 10 years to maturity. The semiannual inflation rate during the 6 months ending 3 months before the first coupon payment (the 3-month lag is necessary to allow for the release of the official CPI figures) is 0.97 percent. Over the next 6-month period inflation is 0.40 percent. Calculate the adjusted principal amount for the second coupon payment. Round the answer to two decimal places. Your Answer:

Consider an investor who purchases a Treasury inflation-indexed note with an original principal amount of $100,000, a 2.875 percent annual coupon rate (coupon is paid semiannually), and 10 years to maturity. The semiannual inflation rate during the 6 months ending 3 months before the first coupon payment (the 3-month lag is necessary to allow for the release of the official CPI figures) is 0.97 percent. Over the next 6-month period inflation is 0.40 percent. Calculate the adjusted principal amount for the second coupon payment. Round the answer to two decimal places. Your Answer:

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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One-year Treasury bills currently earn 2.10 percent. You expect that one year from now, 1-year Treasury bill rates will increase to 2.30 percent. If the unbiased expectations theory is correct, what should the current rat be on 2-year Treasury securities? (Round your answer to 2 decimal places.) Current rate %
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The current one-year Treasury bill rate is 0.40 percent and the expected one-year rate 12 months from now is 1.28 percent. According to the unbiased expectations theory, what should be the current rate for a two-year Treasury security? (Do not round intermediate calculations. Round your percentage answer to 2 decimal places. (e.g., 32.16)) Current rate %
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es www Year 1 2 3 4 5 Returns X59200 15 % -22 10 10 Y 22% 30 -27 "* 10 21 Using the returns shown above, calculate the arithmetic average returns, the variances, and the standard deviations for X and Y. (Do not round intermediate calculations. Enter your average return and standard deviation answers as a percent rounded to 2 decimal places, e.g., 32.16. Enter your variance answers rounded to 5 decimal places, e.g., .16161.) Average returns Variances Standard deviations X 15 % % % Y % &
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