Calculate the one year total rate of return for the bonds

Assignment Help Financial Econometrics

Reference no: EM13334131

Currently, the term structure is as follows: One-year bonds yield 7.75%, two-year bonds yield 8.75%, three-year bonds and greater maturity bonds all yield 9.75%. You are choosing between one-, two-, and three-year maturity bonds all paying annual coupons of 8.75%, once a year. You strongly believe that at year-end the yield curve will be flat at 9.75%.

Calculate the one year total rate of return for the three bonds.

Which bond you would buy? One-year bond, Two-year bond, Three-year bond

Reference no: EM13334131

Questions Cloud

Calculate annual rate of return for 30-year maturity bond : A 30-year maturity bond has a 9% coupon rate, paid annually. It sells today for $897.42. A 20-year maturity bond has a 8.5% coupon rate, also paid annually. It sells today for $909.5.

Calculate the volume charge density of the atmosphere : In a particular region of Earth's atmosphere, the electric field above Earth's surface has been measured to be 147 N/C downward at an altitude of 250 m, Calculate the volume charge density of the atmosphere

The compound given is a cyclohexene with double bonds : Given the parent compound, draw the mass spectrum fragment that is observed at m/z 77. Include any hydrogen atoms and the charge. The compound given is a cyclohexene with double bonds at every other one. It also has a chlorine coming off one of th..

What does the voltmeter read : For the circuit shown in the following figure both meters are idealized, the battery has no appreciable internal resistance, and the ammeter reads 1.19 A. What does the voltmeter read

Calculate the one year total rate of return for the bonds : You are choosing between one-, two-, and three-year maturity bonds all paying annual coupons of 8.75%, once a year. You strongly believe that at year-end the yield curve will be flat at 9.75%.

Write program that uses top five countries national wealth : Write a program that uses the top five countries' National Wealth to calculate the average of those five countries.

Find the new capacitance with this dielectric inserted : A parallel plate capacitor has a capacitance C when there is no dieletric inside of it. Suppose a wedge of material with dielectric constant K is inserted in between the plates of the capacitor, find the new capacitance with this dielectric inserte..

Determines the surface area and volume of a hemisphere : Write an application that reads determines the surface area and volume of a hemisphere and then calculates the radius given a surface area and volume.The first step is to read in the radius from the users and then calculate the surface area and vo..

Simulate a simple version of a game called liar dice : The first player claims a Poker hand (see "Hand Ranks" below for legal calls). When making a claim, a player says what all five dice are, not just the name of the hand. For example, a player should say, "I have a full house: three 4s and two 5s," ..

User Account

All Pages