Which option should you choose? Enter 1 or 2.

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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You have $9,000 to invest, and you do not need to collect
on your investment for 15 years.
• Option 1: You can buy a zero coupon bond with a face
value of $12,000 that matures in 15 years.
• Option 2: You can deposit the money into a CD
account that matures in 15 years with an annual
percentage yield (APR) of 4.515%.
Which option should you choose? Enter 1 or 2.
Transcribed Image Text:You have $9,000 to invest, and you do not need to collect on your investment for 15 years. • Option 1: You can buy a zero coupon bond with a face value of $12,000 that matures in 15 years. • Option 2: You can deposit the money into a CD account that matures in 15 years with an annual percentage yield (APR) of 4.515%. Which option should you choose? Enter 1 or 2.
Zero Coupon Bond
A zero coupon bond is a bond that is sold now at a
discount and will pay its face value when it matures. No
interest payments are made.
Transcribed Image Text:Zero Coupon Bond A zero coupon bond is a bond that is sold now at a discount and will pay its face value when it matures. No interest payments are made.
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