Question
Consider two different 6-month investment plans: (i) buy a 1.5-year maturity STRIP bond today and sell it in 6 months and (ii) buy a 1.5-year
Consider two different 6-month investment plans: (i) buy a 1.5-year maturity STRIP bond today and sell it in 6 months and (ii) buy a 1.5-year maturity 12% COUPON bond and sell it in 6 months.
Qualitatively (no numbers are needed), which of the two strategies would have the higher expected return, using the market's expectations? Why?
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Fundamentals of Investments Valuation and Management
Authors: Bradford D. Jordan, Thomas W. Miller
5th edition
978-007728329, 9780073382357, 0077283295, 73382353, 978-0077283292
