Investment risk by asset allocation and diversification

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1. A zero coupon bond with a face value of $1000 that matures in 18 years sells today for $606. What is the yield to maturity? (Use annual compounding.) Enter in percent to two decimal places.

2. A bond with a par value of $1000 makes semiannual coupon payments of $58. What is its coupon rate? Round to one decimal place. Answer in percent.

3. Analyze how investors may reduce investment risk by asset allocation and diversification. How are correlation and covariance used for an efficient diversification?

Reference no: EM131990345

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