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Unformatted text preview: every year, multiply these present values by (1 + r ). Bond Valuation yields Bond y F C y C y C PV r F r r C Value FaceF coupon,C valuation, Bond r F C r C r C PV T T T T ) 1 ( ...... ) 1 ( ) 1 ( ) 1 ( ) 1 ( 1 1 ) 1 ( ...... ) 1 ( ) 1 ( 2 1 2 1 + + + + + + + = + + ⎥ ⎦ ⎤ ⎢ ⎣ ⎡ + − = + + + + + + + = Nominal Rate and Real Rate ) 1 )( 1 ( ) 1 ( h r R + + = + Fisher Effect. h r R + = An approximation of the Fisher Effect...
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This note was uploaded on 04/15/2008 for the course FINA 3313 taught by Professor Yong during the Fall '08 term at UT Arlington.
 Fall '08
 YONG
 Compounding, Future Value

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