Calculation examples for inflation-linked bonds

5.7 a. Since the coupon rates of the bonds are equal to the market interest rate, the bonds are priced at face value. Both bonds have face values of $1,000. PA = $1,000 PB = $1,000 b. Discount the cash flows of the bonds at 12 percent. Since the coupon rates of both bonds are less than the market interest rate, the bonds will be priced at a ... ................
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