We are considering two bonds. One pays 3% and has a maturity of 8 years, while the other pays 4% and has a maturity of 8
Posted: Sun Apr 17, 2022 6:26 pm
We are considering two bonds. One pays 3% and has a maturity of
8 years, while the other pays 4% and has a maturity of 8 years. If
we expect rates to fall by 1% from their current level, which is
4%, where should we invest, and what is the total ROR we make for
the one versus the other? (Note the first bond drops only .5%,
while the second required rate drops by 1%)
8 years, while the other pays 4% and has a maturity of 8 years. If
we expect rates to fall by 1% from their current level, which is
4%, where should we invest, and what is the total ROR we make for
the one versus the other? (Note the first bond drops only .5%,
while the second required rate drops by 1%)