Essentials of Investments (The Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
Essentials of Investments (The Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
10th Edition
ISBN: 9780077835422
Author: Zvi Bodie Professor, Alex Kane, Alan J. Marcus Professor
Publisher: McGraw-Hill Education
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Chapter 12, Problem 24PS

You have $ 5 , 000 to invest for the next year and are considering three alternatives:
a. A money market fund with an average maturity of 3 0 days offering a current annualized yield of 3 % .
b. A two-year CD at a bank offering an interest rate of 4 . 5 % .
c. A 2 0 -year U.S. Treasury bond offering a yield to maturity of 6 % per year.
What role does you forecast of future interest rates play in your decision? LO 12 1

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