Question: Write a a very detailed risk and return analysis in which you address the following: Bonds What is the return on investing $1,000 in U.S.

Write a a very detailed risk and return analysis in which you address the following:

Bonds

  1. What is the return on investing $1,000 in U.S. Treasury Bonds if selling it after 1 year for $1,088?
  2. Graph the probability distribution for the 5 scenarios during the next year for the 10-year zero coupon Treasury Bonds.

Return on a 10-Year Zero Coupon Treasury Bond

Scenario Probability Return
Worst Case 0.15 -18%
Bad Case 0.25 -3%
Most Likely Case 0.35 6%
Good Case 0.15 19%
Best Case 0.10 28%

Note: The total in the Probability column must equal 1.

Calculate the expected return on this bond given the probability distribution.

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