What would you expect this annualized return to converge to

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Reference no: EM132069767

Consider a 5-year, 10%, $1000 face value bond, bought for $900 at time t, which has a price of $1000 at t+1, $1100 at t+2, $1150 at t+3, $1050 at t+4, and $1000 at maturity. If the investor wanted to maximize his annualized return, when should they sell this bond?

At the 5 year maturity date, what would you expect this annualized return to converge to?

A fussy investor always wants at least 15% from every investment made. A 2-year, $1000 face value discount (zero-coupon) bond is selling for $800. Would they buy it?

Reference no: EM132069767

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