What is the inflation premium for bond that matures

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Reference no: EM132061325

1. Inflation for the following four years is expected to be 3%, 2.2%, 0.7% and 5.6%. What is the inflation premium for a bond that matures in three years?

2. Suppose the spot exchange rate is $1.43 per British pound and the strike on a dollar denominated pound call is $1.30. Assume r = 0.045, rf = 0.06, ? = 0.15 and the option expires in 180 days. What is the call option price?

A) $0.133

B) $0.143

C) $0.153

D) $0.163

Reference no: EM132061325

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