Index-linked government bond

Discussion in 'CA1' started by indexo, Jul 20, 2017.

  1. indexo

    indexo Member

    Is it true that the GRY for IL gov bond = risk-free real rate of return? i.e. expected return = required return for IL bond?
    So here the GRY refers to "real" return?
     
  2. Mark Willder

    Mark Willder ActEd Tutor Staff Member

    Yes, we would calculate a real yield for an index-linked bond.

    The expected return will only equal the required return if the bond is fairly priced.
     

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