问

问题如下：

A 10-year, capital-indexed bond linked to the Consumer Price Index (CPI) is issued with a coupon rate of 8% and a par value of 1,000. The bond pays interest semi-annually. During the first six months after the bond's issuance, the CPI increases by 3%. On the first coupon payment date, the bond's:

选项：

A.

coupon rate increases to 11%.

B.

coupon payment is equal to 41.2.

C.

principal amount increases to 1,100.

解释：

Correct Answer: B

Capital-indexed bonds pay a fixed coupon rate that is applied to a principal amount that increases in line with increases in the index during the bond's life. If the consumer price index increases by 3%, the coupon rate remains unchanged at 8%, but the principal amount increases by 2% and the coupon payment is based on the inflation-adjusted principal amount. On the first coupon payment date, the inflation-adjusted principal amount is 1,000 x (1 + 0.03) = 1,030 and the semi-annual coupon payment is equal to (0.08 x 1,030) / 2 = 41.20.