Chap 10 and 11

Question 1

Real rates of return

Check this card!!!

Answer 1

1 + ir = 1+i/ 1+j

Ir = real rate of return 
I = money rate
J = inflation

Question 2

Inflation indices index linked bond

Answer 2

New / original index

Question 3

Indexing cash flow

Answer 3

Real cash flow = monetary cash flow * index time 0/ index time T

Question 4

Geometric for PV of coupons for index linked bonds

Answer 4

S = a(1- r^n)/ 1-r

Question 5

Running yield

Answer 5

Annual coupon/ price

Question 6

Gross redemption yield

Answer 6

Set price equal to coupons and redemption and solve to find i / quadratic or plug in answers