Ou Have $5 000 To Invest For The Next Year And Are Considering Three Alternatives A Money Market Fund


ou have $5,000 to invest for the next year and are considering three alternatives:

  1. A money market fund

with an average maturity of 30 days offering a current yield of 2.0% per year

  • A 1-year savings deposit 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
  • A 20-year corporate bond offering a yield to maturity of 7.
  • What is the risk profile of each of these assets?

    What role does your forecast of future interest rates play in your decisions?