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Betty and Bob buy 3 bonds. The portfolio is as per: they pay $80 for a 6 month ZCB with $100 redemption value; they pay
Betty and Bob buy 3 bonds. The portfolio is as per: they pay $80 for a 6 month ZCB with $100 redemption value; they pay $94 for a 1 year ZCB with $100 redemption value; they pay $100 for a 1year coupon bond with a coupon rate of 8% per annum payable semiannually and a redemption value of $100.
3a Use the Cash Flow Method to find the portfolio yield to maturity. 3b Find the yield to maturity for each individual bond. 3c Use The Weighted Average Method to find the yield to maturity of the portfolio.
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