An inflation-indexed bond has still three years to its maturity date. Without inflation, the nominal...
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An inflation-indexed bond has still three years to its maturity date. Without inflation, the nominal value of the bond is 1000 millions of euros, 100% of the nominal value is paid back at the maturity date, and interest coupons are paid at the end of each year, with a nominal rate of 10% per annum. Assume that the inflation rate is 2% per year for the next three years. The first coupon (paid at the end of the first year and designated C(1)), the second coupon (paid at the end of the second year and designated C(2), the third coupon (paid at the end of the third year and designated C(3)), and the amount of the capital reimbursement (paid at the maturity date, designated CAPITAL) are respectively: Select one: a. C(1) = M 102, C(2) = M 104, C(3) = M 106, CAPITAL = M 1061. O b. C(1) = C(2) = C(3) = M 100, CAPITAL = M 1000. O C.C(1) = M 104, C(2) = M 106, C(3) = M 108, CAPITAL = M 1100. d. C(1) = M 104, C(2) = M 106, C(3) = M 108, CAPITAL = M 1000
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