If you are about to make a 2-year investment plan with $10, 000 and ONLY two indivisible
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Question:
If you are about to make a 2-year investment plan with $10, 000 and ONLY two indivisible instruments are available:
A: $1, 000 face-value coupon bond, 2-year, selling for $955 with a coupon rate of 3% (2’)
B: $1, 000 face-value discount bond, 2-year, selling for $900 (2’)
Please calculate the YTM of these two instruments. And if you are just allowed to choose only one instrument to invest in, which one would you choose to maximize the returns? (1’) Why? (2’)
Related Book For
Real Estate Finance and Investments
ISBN: 978-0073377339
14th edition
Authors: William Brueggeman, Jeffrey Fisher
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