You are an aggressive investor. The information for the bonds (with face value of $1,000) available on
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Question:
You are an aggressive investor. The information for the bonds (with face value of $1,000) available on the market is as follows:
- Zero-coupon bond with 25 years left to maturity
- 8%, 25-year bond with annual payments
Original interest rate is 9%
You believe that market interest rates are going to decline by 2% in one year. Using present value method, calculate the expected total return in percentage for both bonds.
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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