An investor with an investment horizon of 5 years invests in a bond with a Macaulay duration
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- An investor with an investment horizon of 5 years invests in a bond with a Macaulay duration of 10 years and interest rates rise dramatically immediately after the bond is purchased. Reinvestment returns will be _____ and the bond’s price return will be _____ , with a net result of a horizon yield that is _____ than the bonds initial yield-to-maturity.
- high, positive, higher
- high, negative, higher
- low, positive, higher
- low, negative, higher
- low, negative, lower
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Related Book For
Fundamentals of Investing
ISBN: 978-0133075359
12th edition
Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk
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