A company will have a cash need in three years. To provide for that the financial manager is considering buying a US treasury bond with 10 years to maturity and 4.0% coupon rate, currently priced to yield 4.0%. He will reinvest the coupons in 3% (guaranteed) account. In three years, the bond will be sold at a price reflecting 3.0 % yield. Calculate the investment total return.

Answer rating: 100% (QA)

Calculate the investment total return FV PV x 1 rn FV 40 x 1 ... View the full answer