I have been out of school for a while and can't remember the proper equation to use for this question. The question is: Assume an investor purchases a zero-coupon bond that matures in 2 years with a yield to maturity of 3%. At the time of purchase the investor had a choice to purchase a 5 year bond with a yield of 4.5%. What return would the investor require after the 2 year bond matures to equal the 4.5% return on the 5 year bond?
Paper#27807 | Written in 18-Jul-2015Price : $27