Post a New Question

Finance

posted by .

How can one invest today at the 2-year forward rate of interest?
I) By buying a 2-year bond and selling a 1-year bond with the same coupon
II) By buying a 1-year bond and selling a 2-year bond with the same coupon
III) By buying a 1-year bond and then after a year reinvesting in a further 1-year bond

a. I only

b. II only

c. III only

d. II and III only

Respond to this Question

First Name
School Subject
Your Answer

Similar Questions

  1. Finance

    A 12-year bond has an annual coupon rate of 9%. The coupon rate will remain fixed until the bond matures. The bond has a yield to maturity of 7%. Which of the following statements is CORRECT?
  2. economics

    Jerry is considering buying today a new bond which makes infinite annual payments. In particular the bond pays its holder 557.3 dollars one year from the day of purchase and the annual payment increases by 129.32 dollars each year …
  3. Finance

    A three-year bond has 8.0% coupon rate and face value of $1000. If the yield to maturity on the bond is 10%, calculate the price of the bond assuming that the bond makes semi-annual coupon interest payments.
  4. Finance

    A four-year TIPS bond promises a real annual coupon return of 4 percent and its face value is $1,000. While the annual inflation rate was approximately zero when the bond was first issued, the inflation rate suddenly accelerated to …
  5. Finance

    A three-year bond has 8.0% coupon rate and face value of $1000. If the yield to maturity on the bond is 10%, calculate the price of the bond assuming that the bond makes semi-annual coupon interest payments.
  6. Finance

    2. You are now considering adding a corporate bond to your investment portfolio. The bond was issued last year to have 10 years to maturity (so it has 9 years remaining to maturity from today) The bond has an 8% coupon, and was sold …
  7. Finance

    4.A thirty year US treasury bond has a 4.0 percent interest rate.In contrast, a ten year Treasury bond has an interest rate of 2.5 percent. A maturity risk premium is estimated to be 0.2 percentage points for the longer maturity bond. …
  8. FINANCE

    5. Forecasting Interest Rates Assume the current interest rate on a one-year Treasury bond (1R1) is 5.00 percent, the current rate on a two-year Treasury bond (1R2) is 5.75 percent, and the current rate on a three-year Treasury bond …
  9. FINANCE

    7. Forecasting interest rates Assume the current interest rate on a one-year Treasury bond (1R1) is 5.50 percent, the current rate on a two-year Treasury bond (1R2) is 5.95 percent, and the current rate on a three-year Treasury bond …
  10. Corporate Finance

    You have been asked to estimate the value of a 10-year bond with a coupon that will be low initially but it is expected to grow later in the bond’s life. The coupon is expected to be 5% of the face value of the bond (which is $ 1000) …

More Similar Questions

Post a New Question