In 2016 Beth purchased a 10-year, 3.20% p.a. semi-annual paying coupon bond with a Face Value (FV) of $2 000 000, as she was attracted by the fixed income stream in order to fund her retirement expenses. c) Beth decided to sell the bond from part a) and is considering her investment options. A friend suggested that she invests the proceeds by buying a short-term debt instrument. Explain two advantages of short-term debt instruments.
In 2016 Beth purchased a 10-year, 3.20% p.a. semi-annual paying coupon bond with a Face Value (FV) of $2 000 000, as she was attracted by the fixed income stream in order to fund her retirement expenses.
c) Beth decided to sell the bond from part a) and is considering her investment options. A friend suggested that she invests the proceeds by buying a short-term debt instrument. Explain two advantages of short-term debt instruments.
If beth decides to sell the long-term bond, then here are some advantages of short-term debt instruments.
Short term debt instruments mean a debt instrument whose maturity period is for not more than a year. They are usually redeemed within a year.
Examples- Short term bank loans and commercial paper.
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