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You have $5,000 to invest for the next year and are considering three alternatives: A money...

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Finance

You have $5,000 to invest for the next year and are consideringthree alternatives: A money market fund with an average maturity of30 days offering a current yield of 2.0% per year A 1-year savingsdeposit at a bank offering an interest rate of 4.0% A 20-year U.S.Treasury bond offering a yield to maturity of 4.0% per year A20-year corporate bond offering a yield to maturity of 7. What isthe risk profile of each of these assets? What role does yourforecast of future interest rates play in your decisions?

Answer & Explanation Solved by verified expert
3.7 Ratings (527 Votes)
Money Market fund This is a highly risky investment but the liquidity is very high However the returns are very average hence not worth the risk it ensues Savings Bank Deposit There    See Answer
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