• We are pleased to announce that the winner of our Feedback Prize Draw for the Winter 2024-25 session and winning £150 of gift vouchers is Zhao Liang Tay. Congratulations to Zhao Liang. If you fancy winning £150 worth of gift vouchers (from a major UK store) for the Summer 2025 exam sitting for just a few minutes of your time throughout the session, please see our website at https://www.acted.co.uk/further-info.html?pat=feedback#feedback-prize for more information on how you can make sure your name is included in the draw at the end of the session.
  • Please be advised that the SP1, SP5 and SP7 X1 deadline is the 14th July and not the 17th June as first stated. Please accept out apologies for any confusion caused.

investments

S

Srijan Ghosh

Member
In linked deposits what do you exactly mean by time lag and y it occurs and in any given question in any given time period suppose 5yrs frmm 2000 so hw will i knw whn it will occur if time lag is given 1 year
 
A question on an index-linked bond will specify the length of the time lag to use, eg 3 months.

The time lag relates to the inflation values used to calculate the coupon and redemption payments under an index-linked bond.

eg. the coupon paid at time 5 would be calculated with reference to the inflation from time -0.25 to time 4.75 if there was a three-month (ie 0.25 years) lag.

There is a worked example of the calculation in Section 3.4 of Chapter 12.

The time lag exists in reality to allow the issuer of the bond sufficient time to calculate the coupon and redemption payments to make (ie it is an administrative issue).
 
You must log in or register to reply here.
Back
Top