You observe the following yield curve for risk-free government zeros: Years to Maturity Yield 3 6% 6 7.25% 9 9% 10% 11.5% 12 15 You believe the yield curve will remain the same over the next 20 years, and you decide to buy 9-year zeros, and sell them after 3 years. To your surprise, after 3 years the yield curve shifts and instead becomes: Years to Maturity Yield 3 8% 6 9% 9 10.5% 12 11.5% 15 13.5% What is your annualised rate of return, if you sell the bond as planned after 3 years? Please choose the answer that is closest to the correct answer. 11.11% 14.14% 12.58% 888 6.84% 9.00%

You observe the following yield curve for risk-free government zeros: Years to Maturity Yield 3 6% 6 7.25% 9 9% 10% 11.5% 12 15 You believe the yield curve will remain the same over the next 20 years, and you decide to buy 9-year zeros, and sell them after 3 years. To your surprise, after 3 years the yield curve shifts and instead becomes: Years to Maturity Yield 3 8% 6 9% 9 10.5% 12 11.5% 15 13.5% What is your annualised rate of return, if you sell the bond as planned after 3 years? Please choose the answer that is closest to the correct answer. 11.11% 14.14% 12.58% 888 6.84% 9.00%

Name: vv. Subject :- Finance You observe the following yield curve for risk-
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Description: vv. Subject :- Finance You observe the following yield curve for risk-free government zeros:Years to Maturity Yield36%67.25%99%1210%1511.5%You believe the yield curve will remain the same over the next 20 years, and youdecide to buy 9-year zeros, and

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter11: Capital Budgeting And Risk

Section: Chapter Questions

Problem 20P

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