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Compute the logarithmic return on the investment

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Reference no: EM131637976

Question: Let τ = 1/12 . Invest $100 in six-month zero-coupon bonds trading at B(0, 6) = 0.9400 dollars. After six months reinvest the proceeds in bonds of the same kind, now trading at B(6, 12) = 0.9368 dollars. Find the implied interest rates and compute the number of bonds held at each time. Compute the logarithmic return on the investment over one year.

Reference no: EM131637976

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