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Question 3. An investor wishes to invest $200,000 in bonds that mature in 4 years and earn a yield to maturity of at least 3%
Question 3. An investor wishes to invest $200,000 in bonds that mature in 4 years and earn a yield to maturity of at least 3% per year. Currently she can buy 4 year treasury bonds at $102 per bond that have a yield to maturity of 2%. She decides to also buy some 4 year corporate bonds $90 per bond that have a yield to maturity of 4%. Find the four year growth factor for each type of investment and derive the equations that must hold if her portfolio has the desired yield to maturity, How many corporate bonds, and how many 4 year treasuries, should she buy to ensure this? Give an answer integers. Then determine how much of each type of bond she buys and what the total cost actually is. What will be the actual value of this portfolio after 4 years and what is the actual annual yield? Question 3. An investor wishes to invest $200,000 in bonds that mature in 4 years and earn a yield to maturity of at least 3% per year. Currently she can buy 4 year treasury bonds at $102 per bond that have a yield to maturity of 2%. She decides to also buy some 4 year corporate bonds $90 per bond that have a yield to maturity of 4%. Find the four year growth factor for each type of investment and derive the equations that must hold if her portfolio has the desired yield to maturity, How many corporate bonds, and how many 4 year treasuries, should she buy to ensure this? Give an answer integers. Then determine how much of each type of bond she buys and what the total cost actually is. What will be the actual value of this portfolio after 4 years and what is the actual annual yield
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