Answer is c), please provide steps on how to calculate the answer Question 93 - 100: Consider
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Answer is c), please provide steps on how to calculate the answer
Question 93 - 100: Consider an investor that needs to cover a liability of $1,000 in two years from now. He can invest into (i) a one year pure discount bond and (ii) a five year pure discount bond both having a face value $100. Assume that the yield to maturity is 5%. How many units of the three year pure discount bond does the investor need to purchase to be able to cover the liability of $1,000 for sure even if the yield to maturity changes in the second year? (a) 11.58 units (b) 5.79 units (c)* 2.89 units (d) 2.5 units
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