17:35 (2X)
Discount Bonds under Positive and Negative Interest Rates
Consider a single principal cash flow payable in 20 years on a Republic of lndia government bond issued when the YTM is 6.70 percent. For purposes of this simplified example, we use annual compounding, that is, t is equal to the number of years until the cash flow occurs.
1问：What should an investor expect to pay for this discount bond per lNR100 of principal每 100 卢比本金的折扣债券?
PV= PMT/（1+ YTM）^n= lNR100/（1+ 6.70%）^20=27.33
2问：Suppose after purchase at t =0 we observe an immediate drop in the bond price to INR22.68224 per INR100 of principal. What is the implied interest rate on the discount bond?
假设在 t =0 购买后，我们观察到债券价格立即下跌至每 INR100 本金 22.68224 印度卢比。
求YTM，已知pv=22.68224= lNR100/（1+ YTM）^n=7.70
