Fight Finance

Courses  Tags  Random  All  Recent  Scores

Scores
keithphw$5,791.61
Visitor$1,770.00
oosterhoff$1,667.00
Visitor$550.00
Visitor$530.00
Visitor$480.00
Visitor$460.00
Visitor$380.00
Visitor$380.00
321$360.00
Visitor$360.00
Visitor$360.00
Visitor$350.00
Visitor$350.00
Visitor$350.00
fktragedy$350.00
Visitor$340.00
Kyrie Ir...$340.00
Visitor$340.00
Caysen$330.00
 

Question 56  income and capital returns, bond pricing, premium par and discount bonds

Which of the following statements about risk free government bonds is NOT correct?

Hint: Total return can be broken into income and capital returns as follows:

###\begin{aligned} r_\text{total} &= \frac{c_1}{p_0} + \frac{p_1-p_0}{p_0} \\ &= r_\text{income} + r_\text{capital} \end{aligned} ###

The capital return is the growth rate of the price.
The income return is the periodic cash flow. For a bond this is the coupon payment.



Copyright © 2014 Keith Woodward