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US Treasury notes currently pay an effective annual rate (yield) of 4%. Your financial advisor offers you a savings product that his firm is selling
- US Treasury notes currently pay an effective annual rate (yield) of 4%. Your financial advisor offers you a savings product that his firm is selling for $1000 that matures in 4 years and pays $35 at the end of each year, plus the original $1000 at maturity (in other words, they are $1000 face value bond that pay a 3.5% coupon). If the savings product has the same risk as US treasuries, what is its NPV? What is its IRR?
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Focus On Personal Finance
Authors: Jack R. Kapoor, Les R. Dlabay Professor, Robert J. Hughes, Melissa Hart
5th Edition
0077861744, 978-0077861742
