CT1 Index-Linked Questions

Discussion in 'CT1' started by Stephen King, Apr 3, 2017.

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  1. Stephen King

    Stephen King Member

    For index linked bonds/stocks questions how do you know when to use the equation Q(0)/Q(n) instead of Q(n)/Q(0)?
     
  2. Bharti Singla

    Bharti Singla Senior Member

    I think if cash actually received given in the qus. , then we just need to do Q(0)/Q(n) to find the Payments in time zero units to get the real yield equation.

    On the other hand, if we are given the nominal coupon rate only, we need to first find the cash actually received by doing Q(n)/Q(0) and then we need to do Q(0)/Q(n) to get the Payments in time zero units for real yield equation.
     
  3. Stephen King

    Stephen King Member

    Yea I understand now. Thanks for the help Bharti :)
     
    Bharti Singla likes this.

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