CT1 Q&A Bank 4.20 Changes in interest rates

Discussion in 'CT1' started by Faith Nyanchama, Jul 19, 2017.

  1. Faith Nyanchama

    Faith Nyanchama Member

    Hello...
    Anyone please explain to me this question...
    And why isn't it 7v+14v^2+ 112v^3. Because the bonds are redeemable at yrlear one ,two and three.


    Question 4.20
     

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    Faith Nyanchama, Jul 19, 2017
    #1
  2. John Lee

    John Lee ActEd Tutor Staff Member

    It's three separate bonds.
     
    John Lee, Jul 24, 2017
    #2
  3. Faith Nyanchama

    Faith Nyanchama Member

    So how will the equation form???
     
    Faith Nyanchama, Jul 24, 2017
    #3
  4. John Lee

    John Lee ActEd Tutor Staff Member

    The three year bond is only redeemable in 3 years which is why it is 98= 7v + 7v² + 112v³
     
    John Lee, Jul 24, 2017
    #4

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