Two investors are each issued one bond with the same face value, maturity date, and yield. After both bonds have reached maturity, it is discovered that one of the bondholders received a greater total return on her investment. If all expected payments were received, which of the following could explain the difference in return?
a.) One of the bonds was sold at face value while another was sold below face value.
b.) One of the bonds was a municipal bond while the other was a savings bond.
c.) One of the bonds was a corporate bond while the other was a savings bond.
d.) One of the bonds earned a greater interest payment than the other.
I think its either b or d. I'm not sure though.
4 answers
Its A. i just turned it in
Answers:
1. Junk bonds
2. $510
3. Money market
4. An investor sells a bond to another investor
5. One of the bonds was sold at face value while the other was sold below face value.
1. Junk bonds
2. $510
3. Money market
4. An investor sells a bond to another investor
5. One of the bonds was sold at face value while the other was sold below face value.
Destieltrash is right, for 2 simply multiply the face value by the percentage raised or decreased raised is for example 1.05 and for decreased for example 0.005 is the right way to do it.
sorry I meant 1.005 for the increase
1 answer