Two-year horizon and purchase a ten-year

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Assume you have a two-year horizon and purchase a ten-year 4% coupon bond at a 5% yield-to-maturity. What risks do you face? Choose two for 2 points each.

a) the 1-year reinvestment rate in 1 year

b) the 2-year reinvestment rate in 1 year

c) the 10-year reinvestment rate in 2 years

d) the yield on a 10-year bond in 2 years

e) the yield on an 8-year bond in 2 years

f) the yield on a 2-year bond in 8 years

Reference no: EM133057359

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