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You use a 5-year Treasury bond and a 5-year investment grade corporate bond to construct a bond portfolio. The yield to maturity of the Treasury
You use a 5-year Treasury bond and a 5-year investment grade corporate bond to construct a bond portfolio. The yield to maturity of the Treasury bond is 3% and that of the corporate bond is 5%. You invest $500 in the Treasury bond and $1,000 in the corporate bond. The expected annual return of the bond portfolio in the next 5 year period would be _____.
Group of answer choices
3.67%
4%
4.33%
Undetermined because the correlation of the two bonds' returns are not known
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