Question
If the only information you had was that you were required to invest in a financial instrument that would generate a pre-tax return of 10%,
If the only information you had was that you were required to invest in a financial instrument that would generate a pre-tax return of 10%, which of the following statements generally best describes your choices? (This question is worth 2 points.)
a) You could buy a newly issued treasury bill with a 10% coupon and hold it to maturity.
b) You could not buy a 3-year treasury note with a 10% coupon in the second year after issue and hold it to maturity if the market interest rate when you buy the note is lower than when the note was issued.
c) You could buy a 10-year treasury bond at issue with a 10% coupon and hold it to maturity if you were certain that the risk free rate bond issue capture the expected rate of inflation during the holding period.
d) All of the above.
e) None of the above.
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