Topic 2: Return measures2. Which of the following investments do you prefer?(a) Purchase a zero-coupon bond, which pays $1000 in ten years, for a price of $550.(b) Invest $550 for ten years in a bank savings account at a guaranteed annual interestrate of 5.5%.1

Essentials Of Investments
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Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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Topic 2: Return measures
2. Which of the following investments do you prefer?
(a) Purchase a zero-coupon bond, which pays $1000 in ten years, for a price of $550.
(b) Invest $550 for ten years in a bank savings account at a guaranteed annual interest
rate of 5.5%.
1

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