EBK INVESTMENTS
11th Edition
ISBN: 9781259357480
Author: Bodie
Publisher: MCGRAW HILL BOOK COMPANY
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Question
Chapter 5, Problem 4PS
A
Summary Introduction
To determine: The role of the forecast of the future interest for the investment.
Introduction:
B
Summary Introduction
To determine: the role of the forecast of the future interest for the investment of the $5,000 in a one year saving deposit of a bank with interest rate of 7.5%.
Introduction: Forecasting is the method used to determine better and safest investment plan by which investor can expect extra amount of return by making comparison in different plans.
C
Summary Introduction
To determine: the role of the forecast of the future interest for the investment of the $5,000 in a 20-year U.S. treasury bond with 9% yield to maturity per year is to be determined.
Introduction: Forecasting is the method used to determine better and safest investment plan by which investor can expect extra amount of return by making comparison in different plans.
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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 $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?
You are considering investing in a savings bond that will pay $50,000 in 6 years. If the competitive market rate is fixed at 6% per year, what is the bond worth today?
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