Jenelle78
Nov 15, 2012, 12:39 PM
Judy Johnson is choosing between investing in two Treasury securities that mature in five years and have par values of $1000. One is a Treasury note paying an annual coupon of 5.06 percent. The other is a TIPS which pays 3 percent interest annually.
(c) When each bond matures, what par value will Judy receive from the Treasury note? The TIPS?
(d)After five years, what is Judy’s total income (interest + par) from each bond? Should she use this total as a way of deciding which bond to purchase?
(c) When each bond matures, what par value will Judy receive from the Treasury note? The TIPS?
(d)After five years, what is Judy’s total income (interest + par) from each bond? Should she use this total as a way of deciding which bond to purchase?