Speculate as to why an investor may buy into the bond market when prices are dropping.

***Under 350 WORDS***

Please respond to the following:

  • i) Speculate as to why an investor may buy into the bond market when prices are dropping. Provide support for your rationale. Determine two reasons that the stated yield to maturity and realized compound yield to maturity of a default free zero coupon bond must always be equal. Support your answer with examples.