Assuming you have an inflation linker that pays an annual coupon of 2.5% every half a year and the real yield is 3%. What will be the price of the if it matures after 3.5 without the inflation adjustment? Assume the principal is 100. 98.35 97.2 99.1 NONE OF THE ABOVE

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Interest Rate

When you deposit your money with the bank, the deposit earns you some extra money at the end of the specific period – something more than what you deposited. That amount of money that the bank pays you for keeping the money with the bank is the “interest” and the percentage at which the bank pays you for your amount is called the “interest rate”.