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Calculate the real worth of the investment in today dollars

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Q1) Ayeza thinks of investing $10,000 a year in real terms into her investment account for the next four years. The relevant nominal discount rate is 7.5% and the inflation rate is 4.2%. Calculate the real worth of the investment in today's dollars.

Q2) In the context of asset pricing, the finance literature implies that an investor will be indifferent between two bonds which shows equal yields to maturity if they are of similar default risk. What are some of the factors which could make an investor decide between bonds having similar characteristics of risks? Justify your answer.

Reference no: EM133074250

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