23) Government of Pakistan decides to issue 3 year pond. The data which their analyst gave them are as Follows: nflation premium = 3% Reinvestment risk = 2% a) Calculate the coupon rate which government shoul offer to the bond holder.

Essentials Of Investments
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Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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Q3) Government of Pakistan decides to issue 3 year
bond. The data which their analyst gave them are as
follows:
Inflation premium = 3%
Reinvestment risk = 2%
a) Calculate the coupon rate which government should
offer to the bond holder.
b) Why are certain premiums required for calculating
bond coupon rate of private bonds but are not
applicable in calculation of govt bond.
Transcribed Image Text:Q3) Government of Pakistan decides to issue 3 year bond. The data which their analyst gave them are as follows: Inflation premium = 3% Reinvestment risk = 2% a) Calculate the coupon rate which government should offer to the bond holder. b) Why are certain premiums required for calculating bond coupon rate of private bonds but are not applicable in calculation of govt bond.
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