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
- What is the return on investing $1,000 in U.S. Treasury Bonds if selling it after 1 year for $1,088?
- 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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