Fixed interest

Question 1

How is the next coupon on an index-linked gilt determined?

Answer 1

• Take RPI value.
• 3 months prior to coupon date.
• Divide by RPI set at issue date.
• Apply to the coupon.
• Divided by two/paid half yearly.

Question 2

What does a flat yield curve indicate?

Answer 2

• Interest rates not expected to rise.
• Expected that inflation will not increase.
• Slow economic growth.