Dillon can buy a fixed-rate bond with a 4% coupon, a $10,000 principal, and five years left to maturity or a TIPS with the same principal and age to maturity with a 2% coupon. Compare the two bonds if Inflation runs 3% per year on average.
Select the best answer from the choices provided.
OA. The fixed-rate bond has a better yield.
OB.
The TIPS has a better yield.
O C.
Both yields are roughly equivalent.
OD
The yields vary with inflation.

answer: 12

step-by-step explanation:

because yes

what i would say the best answer is a. 40.5

required rate of return = 0.166 = 16.6%

step-by-step explanation:

under the capital asset pricing model (capm), the required or expected rate of return for a particular security or asset is given using the formula:

required rate of return = risk-free rate + beta*(market risk premium)

we are given that;

risk-free rate = 4% = 0.04

beta = 1.4

market risk premium = 9% = 0.09

we simply plug these values into the above formula;

required rate of return = 0.04 + 1.4*(0.09)

required rate of return = 0.04 + 0.126

required rate of return = 0.166 = 16.6%

so the possibilities of the measurement of the side of the triangle are either it is longest side or not the longest side

when it is the longest side

s < 25 + 35s < 60

if it is not the longest side

35 < 25 + s10 < sso 10 < s < 60so the perimeter70 < p < 130