Discuss these questions
Discussion Hints:
1. Coupon rate and maturity price effect.
2. Required rate of return.
3. Bootstrapping with formulas.
4. Expectations theory with formulas.
5. Federal Reserve Bank and the Federal Funds rate.
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Questions
Q1
Coupon rate refers to the yield paid by a given security. The coupon rate if often given as a percentage. The percentage is multiplied by the value of the bond or investment to determine the income or dividends that are supposed to be paid to the holder of the security (Van, 2011). The coupon rate is often given annually depending with the agreement that has been made between the bond holder and the issuer of the security.
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