Asked by Kasey

An investor has $1400 to invest, and his financial analyst recommends two types of junk bonds. The A bonds have a 6% annual yield with a default rate of 3%. The B bonds have a 9% annual yield with a default rate of 7%. (If the bond defaults, the $1400 is lost.) Which of the two bonds is better? Why? Should he select either bond? Why or why not?
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