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As of today, you have money to make a down payment on a house which you expect to buy in five years. You are considering different ways to invest this money. Due to the uncertainty, you do not want to invest in stocks. Your choices are the following: 10-year Treasury bond, with semiannual coupons 5-year Corporate bond, single A rating from S&P, semiannual coupons 3-year zero coupon corporate bond, rated AA from S&P 5-year Treasury bond, with semiannual coupons 90-Day Treasury Bill 5-year Corporate bond, single B rating from S&P, with semiannual coupons Which bond would you choose to invest in?

As of today, you have money to make a down payment on a house which you expect to buy in five years. You are considering different ways to invest this money. Due to the uncertainty, you do not want to invest in stocks. Your choices are the following: 10-year Treasury bond, with semiannual coupons 5-year Corporate bond, single A rating from S&P, semiannual coupons 3-year zero coupon corporate bond, rated AA from S&P 5-year Treasury bond, with semiannual coupons 90-Day Treasury Bill 5-year Corporate bond, single B rating from S&P, with semiannual coupons Which bond would you choose to invest in?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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As of today, you have money to make a down payment on a house which you expect to buy in five years. You are considering different ways to invest this money. Due to the uncertainty, you do not want to invest in stocks. Your choices are the following:

  • 10-year Treasury bond, with semiannual coupons

  • 5-year Corporate bond, single A rating from S&P, semiannual coupons

  • 3-year zero coupon corporate bond, rated AA from S&P

  • 5-year Treasury bond, with semiannual coupons

  • 90-Day Treasury Bill

  • 5-year Corporate bond, single B rating from S&P, with semiannual coupons



Which bond would you choose to invest in?

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