January 2001, Bianca invested $5,000 for three years at 4.20%; in January 2010, she invested $5,000 for two years at 3.81%; and, in January 2011, she invested $5,000 for one year at 3.55%. Bianca's savings account in each year paid 2.8%, 1.59%, and 1.13% respectively. In January, 2014, if Bianca reinvests her initial capital of $15,000., plus the interest it has earned for another two-year term, her bank will likely offer to pay a higher rate of
January 2001, Bianca invested $5,000 for three years at 4.20%; in January 2010, she invested $5,000 for two years at 3.81%; and, in January 2011, she invested $5,000 for one year at 3.55%. Bianca's savings account in each year paid 2.8%, 1.59%, and 1.13% respectively. In January, 2014, if Bianca reinvests her initial capital of $15,000., plus the interest it has earned for another two-year term, her bank will likely offer to pay a higher rate of
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
In January 2001, Bianca invested $5,000 for three years at 4.20%; in January 2010, she invested $5,000 for two years at 3.81%; and, in January 2011, she invested $5,000 for one year at 3.55%. Bianca's savings account in each year paid 2.8%, 1.59%, and 1.13% respectively. In January, 2014, if Bianca reinvests her initial capital of $15,000., plus the interest it has earned for another two-year term, her bank will likely offer to pay a higher rate of return
Question 27 options:
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to compensate for junk bonds relatively high chance of default.
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as compensation for the relatively high chance of bank failures.
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to match the rate of return that its bonds are expected to pay at the time of purchase.
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on the CD in exchange for her promise to leave the funds invested for the set-term.
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