Detrmine the nominal rate of the bond

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Reference no: EM131883447

1. An 8.7%, fifteen-year bond yields 6.7%. If the yield remains unchanged, what will be its price one year hence? Assume annual coupon payments. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

2. The two-year interest rate is 13.0% and the expected annual inflation rate is 6.5%.

a. ) What is the expected real interest rate? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

b.) If the expected rate of inflation suddenly rises to 8.5%, what does Fisher's theory say about how the real interest rate will change? What is the nominal rate? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Reference no: EM131883447

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