Bond CPI 36.9 108 39.8 110.3 42.4 113.6 38.1 116.1 36.4 118.4 39.2 120.9 44.6 123.2...

Bond	CPI
36.9	108
39.8	110.3
42.4	113.6
38.1	116.1
36.4	118.4
39.2	120.9
44.6	123.2
45.1	125.4

(a) Calculate the simple returns (b) Calculate the continuously compounded returns (c) Calculate the prices of the bond each year in 2013 terms (d) Calculate the real returns ( qquestion d only)

Expert Solution

(d) Calculation of Real Returns:

Bond	CPI	Return	Inflation	Real Return [(1+return) / (1+inflation) - 1]
36.9	108
39.8	110.3	0.078590786	0.021296296	5.60997722%
42.4	113.6	0.065326633	0.029918404	3.43796447%
38.1	116.1	-0.101415094	0.022007042	-12.07644678%
36.4	118.4	-0.044619423	0.019810508	-6.31783358%
39.2	120.9	0.076923077	0.021114865	5.46541961%
44.6	123.2	0.137755102	0.019023987	11.65145441%
45.1	125.4	0.011210762	0.017857143	-0.65297774%

The formulae used in the above calculation have been presented below for your reference:

ekkarill92 answered 3 years ago

Between last year and this year, the CPI in Blueland rose from 100 to 108 and...

Between last year and this year, the CPI in Blueland rose from 100 to 108 and the CPI in Redland rose from 100 to 104. Blueland’s currency unit, the blue, was worth $0.90 (U.S.) last year and is worth $0.80 (U.S.) this year. Redland’s currency unit, the red, was worth $0.45 (U.S.) last year and is worth $0.40 (U.S.) this year. Consider Blueland as the home country. a. Calculate Blueland’s nominal exchange rate with Redland last year. Instructions: Enter your...

You purchased a bond on 12/5/2019 for $108 that makes semi-annual payments of $5. The bond...

You purchased a bond on 12/5/2019 for $108 that makes semi-annual payments of $5. The bond matures on 1/31/2029 and makes its final coupon payment on this date. Par value is 100. #16) What was the yield to maturity of this bond on the date it was purchased? #17) What was the bond's duration on the date it was purchased? #18) How much accrued interest did you pay on the bond? Use (Actual/Actual) to determine the fraction of the coupon...

Consider a 2.55 percent TIPS with an issue CPI reference of 193.8. The bond is purchased...

Consider a 2.55 percent TIPS with an issue CPI reference of 193.8. The bond is purchased at the beginning of the year (after the interest payment), when the CPI was 203.7. For the interest payment in the middle of the year, the CPI was 206.7. Now, at the end of the year, the CPI is 210.4 and the interest payment has been made. What is the total return of the TIPS in dollars? What is the total return of the...

Consider a 2.40 percent TIPS with an issue CPI reference of 190.5. The bond is purchased...

Consider a 2.40 percent TIPS with an issue CPI reference of 190.5. The bond is purchased at the beginning of the year (after the interest payment), when the CPI was 200.4. For the interest payment in the middle of the year, the CPI was 203.4. Now, at the end of the year, the CPI is 207.1 and the interest payment has been made. What is the total return of the TIPS in dollars? (Do not round intermediate calculations. Round...

Consider a 5.00 percent TIPS with an issue CPI reference of 203.6. The bond is purchased...

Consider a 5.00 percent TIPS with an issue CPI reference of 203.6. The bond is purchased at the beginning of the year (after the interest payment) when the CPI was 211.5. For the interest payment in the middle of the year, the CPI was 213.1. Now, at the end of the year, the CPI is 217.6 and the interest payment has been made. What is the total return of the TIPS in dollars? Round your final answer to 2 decimal...

Assume that the Treasury bond futures price is 108-09. Which of the following four bonds is...

Assume that the Treasury bond futures price is 108-09. Which of the following four bonds is cheapest to deliver (CTD)? Bond Price Conversion Factor 1 102-30 0.9499 2 102-14 0.9444 3 101-11 0.9285 4 99-22 0.9119

Question