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Ticker Coupon Maturity Price Yield Corp A 0% 10/1/2030 67.30 4% Corp B 5% 10/1/2030 108.18 4% Your customer has $30,000,000 to invest and believes
Ticker | Coupon | Maturity | Price | Yield |
Corp A | 0% | 10/1/2030 | 67.30 | 4% |
Corp B | 5% | 10/1/2030 | 108.18 | 4% |
Your customer has $30,000,000 to invest and believes that after purchasing the above securities the reinvestment rate will be at 3% for the next ten years. She can purchase the above bonds at those particular yields and prices. Assuming that any investment will be held until maturity which investment should she choose? You must cite ranges of annualized rate of returns for each bond and provide clear reasoning of why that range occurs.
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