Question
An investor has an expectation that the market interest rate would keep going down. Considering the bond pricing theorem, which one of the following bonds
An investor has an expectation that the market interest rate would keep going down. Considering the bond pricing theorem, which one of the following bonds would the investor most likely purchase?
A. 5% coupon bond that matures in 3 years.
B. 10% coupon bond that matures in 3 years.
C. Zero coupon bond that matures in 5 years.
D. 10% coupon bond that matures in 5 year
Step by Step Solution
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Step: 1
The right option is c Explanation Rule 1 Higher maturity bonds are more se...
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Statistics And Data Analysis For Financial Engineering
Authors: David Ruppert
1st Edition
1461427495, 978-1461427490
