Return required to induce investor to buy two-year security


Problem: The following pattern for one-year Treasury bills is expected over the next four years:

Year1, 3%
Year2, 5%
Year3, 6%
Year4, 7%

Q1. What return would be necessary to induce an investor to buy a two-year security?

Q2. What return would be necessary to induce an investor to buy a three-year security?

Q3. What return would be necessary to induce an investor to buy a four-year security?

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Finance Basics: Return required to induce investor to buy two-year security
Reference No:- TGS02070803

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