You have $5,000 to invest for the next year and are considering three alternatives:a. A money market fund with an average maturity of 30 days offering a current yield of 6% per year.b. A 1-year savings deposit at a bank offering an interest rate of 7.5%.c. A 20-year U.S. Treasury bond offering a yield to maturity of 9% per year.What role does your forecast of future interest rates play in your decisions?

You have $5,000 to invest for the next year and are considering three alternatives:a. A money market fund with an average maturity of 30 days offering a current yield of 6% per year.b. A 1-year savings deposit at a bank offering an interest rate of 7.5%.c. A 20-year U.S. Treasury bond offering a yield to maturity of 9% per year.What role does your forecast of future interest rates play in your decisions?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 9P

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You have $5000 to invest for the next year and are considering three alternatives: a money market fund with an average maturity of 30 days offering a current yield of 6% per year. a 1-year savings deposit at a bank offering an interest rate of 7.5% a 20-year U.S. Treasury bond offering a yield to maturity of 9% per year What role does your forecast of future interest rates play in your decisions?
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