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A 5-year treasury bond is issued at par value 1,000 with a fixed coupon of 10% in 2015 Today is 1/1/2018, the bond has 2
A 5-year treasury bond is issued at par value 1,000 with a fixed coupon of 10% in 2015
Today is 1/1/2018, the bond has 2 years left to maturity.
Current 2-year CD interest rate is 5% and 2-year SP500 return is expected to be 3%.
What is your strategy if you have $5,000 to invest and wish to maximize return with the lowest chance for loss?
a. Invest your allocation into a 2 year CD rate of 5%
b. Invest your allocation into the SP500 with expected return 3%
c. Buy 4 or 5 T bonds with coupon 10% and hold to maturity
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