Deborah would like to invest a certain amount of money for two years and considers investing in a one-year bond that pays 4% and a two-year bond that pays 7%. Deborah is considering the following investment strategies:

Strategy A: Buy a one-year bond that pays 4% and in one year buy another one-year bond.
Strategy B: Buy a two-year bond that pays 7% this year and 7% next year.

If the one-year bond that Dina can purchase in one year pays 9%, Deborah will choose:_______

Question

08-02-2021
Business

Answered

Westonci.ca is the Q&A platform that connects you with experts who provide accurate and detailed answers. Discover detailed answers to your questions from a wide network of experts on our comprehensive Q&A platform. Discover detailed answers to your questions from a wide network of experts on our comprehensive Q&A platform.

Deborah would like to invest a certain amount of money for two years and considers investing in a one-year bond that pays 4% and a two-year bond that pays 7%. Deborah is considering the following investment strategies:

Strategy A: Buy a one-year bond that pays 4% and in one year buy another one-year bond.
Strategy B: Buy a two-year bond that pays 7% this year and 7% next year.

If the one-year bond that Dina can purchase in one year pays 9%, Deborah will choose:_______

Sagot :

Thank you for your visit. We are dedicated to helping you find the information you need, whenever you need it. Thanks for stopping by. We strive to provide the best answers for all your questions. See you again soon. Thank you for trusting Westonci.ca. Don't forget to revisit us for more accurate and insightful answers.

A friend asks you to edit their 15-page term paper. Given your own workload, you tell them you're unable to do it. They then ask you if you could just read the

1. The following table gives the advertisement cost and sales volume in thousands of birr for a sample of 10 HHs.\begin{tabular}{|l|l|l|l|l|l|l|l|l|l|l|}\hline

What is a key trend in modern office layouts? A. Maximizing physical transfer of paperwork B. Reducing electronic communication C. Creating an image of openness

What is a capsid?A. A tube that extends from a bacteriaB. A piece of bacterial DNAC. A protective shell around a virusD. A virus that causes a cold

How much does each of them receive from the sale of the boat?Greg, Nigel, and Mike buy a boat. The information below shows how much each of them paid towards th

Which equation shows the correct relationship between mechanical energy, kinetic energy, and potential energy?A. [tex]ME = KE + PE[/tex]B. [tex]ME + KE = PE[/te

Which of the following is the best way to describe the manner in which the media covers certain policy issues or events to set the public agenda?A. FramingB. Fa

During a trade deficit, domestic capital leaves a nation's economy to be invested abroad.Select the correct answer below:A. TrueB. False

What virus, first identified in late 2019, caused a global pandemic leading to widespread health and economic impacts?A) SARSB) EbolaC) COVID-19D) Zika

In Example 5.4, we considered the random variables [tex]Y_1[/tex] (the proportional amount of gasoline stocked at the beginning of a week) and [tex]Y_2[/tex] (t

anthougo anthougo · Answer 1 · 2021-02-10T23:27:27-05:00

Answer:

If the one-year bond that Dina/Deborah can purchase in one year pays 9%, Deborah will choose:_______

Strategy B.

Explanation:

a) Data:

Interest on one-year bond = 4%

Interest on a two-year bond = 7%

Investment strategies:

Strategy A: Buy a one-year bond that pays 4% and in one year buy another one-year bond.

Strategy B: Buy a two-year bond that pays 7% this year and 7% next year.

b) Although choosing a fixed income investment is a conservative strategy because returns are generated from low-risk securities that pay predictable interest, this strategy may be preferred by Deborah instead of another that pays at variable interest rates. The variable-interest bond will need to pay higher varying interest rates to be attractive to Deborah. Paying 4% in year one and another 9% in year two will not make the bond investment more attractive than a straight two-year bond that pays at 7% per year.

Sagot :

Other Questions