Question 3 We now want to pursue a more short term investment with more liquidity. Currently, the yield on 2-year US treasuries is 2.51%. Our 2-year treasury will yield a coupon payment every 6-months. Given the expanded version of our FV equation, what is the future value of this investment if all coupon payments were re-invested into principal until maturity? Note: we are only finding nominal returns here. FV = PV(1 + %)(n)(1) . t Where: FV = Future Value PV = Present Value = r=rate of interest n = compounding period t = compounding frequency Question 3 We now want to pursue a more short term investment with more liquidity. Currently, the yield on 2-year US treasuries is 2.51%. Our 2-year treasury will yield a coupon payment every 6-months. Given the expanded version of our FV equation, what is the future value of this investment if all coupon payments were re-invested into principal until maturity? Note: we are only finding nominal returns here. FV = PV(1 + %)(n)(1) . t Where: FV = Future Value PV = Present Value = r=rate of interest n = compounding period t = compounding frequency