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A. Treasury model - Lynda, (as an investor, not a dealer) uses her $500,000 to buy Treasury bonds. Lynda can buy one of the following
A. Treasury model - Lynda, (as an investor, not a dealer) uses her $500,000 to buy Treasury bonds. Lynda can buy one of the following three Treasury bonds which have 20 years to maturity remaining:
Bond 1 has 3.50% coupon rate, 114.66 bid price, 115.66 asked price, and 2.50% YTM.
Bond 2 has 1.50% coupon rate, 83.34 bid price, 84.34 asked price, and 2.50% YTM.
Bond 3 has 2.50% coupon rate, 99.00 bid price, 100.00 asked price, and 2.50% YTM.
1. Which bond would you recommend for Lynda to buy? Explain your answer.
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