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You have an obligation to pay $148 in four years and 2 months. In which bond would you invest your $100 to accumulate this amount,
You have an obligation to pay $148 in four years and 2 months. In which bond would you invest your $100 to accumulate this amount, with relative certainty, even if the there is a parallel shift in the term structure of interest rates? All bonds pay interest annually and have a face value of $100
a.a 6-year; 10% coupon par value bond
b.a 5-year; 10% coupon par value bond
c.a 5-year; zero-coupon bond
d.a 4-year; 10% coupon par value bond e.none of the above
Thanks a lot!
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