How much interest will judy receive over the five years

Reference no: EM13290979

Judy Johnson is choosing between investing in two Treasury securities that mature in five years and have par values of $1,000. One is a Treasury note paying an annual coupon of 5.06 percent. The other is a TIPS which pays 3 percent interest annually.

a. If inflation remains constant at 2 percent annually over the next five years, what will be Judy's annual over the next five years, what will be Judy's annual interest income from the TIPS bond? From the Treasury note?
b. How much interest will Judy receive over the five years from the Treasury note? From the TIPS?
c. When each bond natures, what par value will Judy receive from the Treasury note? The TIPS?
d. After five years, what is Judy's total income (interest + par) from each bond? Should she use this total as a way of deciding which bond to purchase?

Reference no: EM13290979

Questions Cloud

Explain acid-base chemistry occurring in the solution : If solutions of NH4Cl (aq) and NH3 (aq) are mixed, which ions in the resulting solution are spectator ions in any acid-base chemistry occurring in the solution

What is the initial speed of the bullet : A bullet shot straight up into the air returns to it's starting point in 10 seconds. What is the initial speed of the bullet

What are the intrinsic values of stock d and g : The companiew are equally risky, and their required rate of return is 15 percent. D's constandt growth rate is zero and G's is 8.33 percent. What are the intrinsic values of stock D and G?

Compute the direction and magnitude of the frictional force : A 2,493-kg car is moving down a road with a slope (grade) of 14% at a constant speed of 13 m/s. compute the direction and magnitude of the frictional force

How much interest will judy receive over the five years : Judy Johnson is choosing between investing in two Treasury securities that mature in five years and have par values of $1,000. One is a Treasury note paying an annual coupon of 5.06 percent. The other is a TIPS which pays 3 percent interest annual..

Obtain the temperature coefficient of resistivity : A wire 3.00 m long and 0.450 mm2 in cross-sectional area has a resistance of 39 at 20°C. what is the temperature coefficient of resistivity

Explain what fragmentation would give rise : What fragmentation would give rise to the peak at m/z 45 in the Mass Spectrum. Loss of hydroxyl group.

Find the projects coefficient of variation : Both the best case scenario and the worst case scenario have a 20% probability of occurrence. Find the project's coefficient of variation.

What is average velocity on level spot : A snow skier, starting from rest, goes downhill for 5.00s and reaches a level spot of smooth snow. What is average velocity on level spot

User Account

All Pages