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Zoel enterprise is thinking about introducing their new product as a part of their expansion plan which they have been planning over the last 4
Zoel enterprise is thinking about introducing their new product as a part of their expansion plan which they have been planning over the last 4 years but everything was not falling in Place. Now they can issue bond to do the funding of the project. Broker has shown two bonds- Bond A and Bond B. Each has a maturity of 12 years, a par value of $1,000. In terms of yield to Maturity both bonds have shown the following trend- Year Frequency (Probability) Bond A (YTM) Bond B (YTM) 2016 0.3 30% 22% 2017 0.2 18% 10% 2018 0.1 11% 25% 2019 0.2 28% 6% 2020 0.2 10% 9% Based on the historical YTM rate of these two bonds and probability distribution, what should be the average rate of return (YTM) for each bond in the Year 2021. Find out the riskiness of each bond. Being an investor, which bond would you prefer
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