Suppose that an investor observes these prices and yields-to-maturity on zero-coupon government bonds: Yield-to- Maturity Maturity 1 years 2 years 3 years Price 97.50 94.25 91.75 2.235% 2.674% 2.782% The prices are per 100 of par value. The yields-to-maturity are stated on a semi-annual bond basis. An investor decide to buy the two-year zero and reinvest in another one-year zero in two years. Based on this decision, which of the following is the minimum yield-to-maturity the investor expects on one-year zeros two years from now? 2.707% 1.488% 3.880% 2.458% 2.998%
Suppose that an investor observes these prices and yields-to-maturity on zero-coupon government bonds: Yield-to- Maturity Maturity 1 years 2 years 3 years Price 97.50 94.25 91.75 2.235% 2.674% 2.782% The prices are per 100 of par value. The yields-to-maturity are stated on a semi-annual bond basis. An investor decide to buy the two-year zero and reinvest in another one-year zero in two years. Based on this decision, which of the following is the minimum yield-to-maturity the investor expects on one-year zeros two years from now? 2.707% 1.488% 3.880% 2.458% 2.998%
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Ff.124.
![Suppose that an investor observes these prices and yields-to-maturity on zero-coupon government bonds:
Yield-to-
Maturity
Maturity
1 years
2 years
Price
97.50
94.25
2.235%
91.75
2.674%
3 years
The prices are per 100 of par value. The yields-to-maturity are stated on a semi-annual bond basis. An investor decide to
buy the two-year zero and reinvest in another one-year zero in two years. Based on this decision, which of the following is
the minimum yield-to-maturity the investor expects on one-year zeros two years from now?
2.707%
1.488%
3.880%
2.458%
2.998%
2.782%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F944142c0-9ef7-443d-ac16-a471a215da64%2F401113de-6bdc-4c0d-93af-b2902142e863%2Faupksg_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Suppose that an investor observes these prices and yields-to-maturity on zero-coupon government bonds:
Yield-to-
Maturity
Maturity
1 years
2 years
Price
97.50
94.25
2.235%
91.75
2.674%
3 years
The prices are per 100 of par value. The yields-to-maturity are stated on a semi-annual bond basis. An investor decide to
buy the two-year zero and reinvest in another one-year zero in two years. Based on this decision, which of the following is
the minimum yield-to-maturity the investor expects on one-year zeros two years from now?
2.707%
1.488%
3.880%
2.458%
2.998%
2.782%
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