Homework answers / question archive / As an aggressive investor, your investment objective is to maximize capital gains

As an aggressive investor, your investment objective is to maximize capital gains

Finance

Share With

As an aggressive investor, your investment objective is to maximize capital gains. You are considering the purchase of a bond that would meet your objective. The information for the bonds available on the market is as follows:

? Bond A with duration of 2.45 years with yield to maturity of 6.5%

? Bond B with duration of 9.30 years with yield to maturity of 10%

? Bond C with duration of 8.75 years with yield to maturity of 5.75%

If the bonds are alike in all other respects, determine the bond you should purchase if you feel the market interest rates are going to decline by 0.25% in the near future. Explain and provide a numerical evidence to support your answer. (Explain your answer please)