Comparing two investment options

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Reference no: EM131004527

You are comparing two investment options: you can purchase a 5-year bond with 10% coupon rate from company ABC or put the purchase price of the bond into a 5 year bank CD what pays 5% interest rate. Assuming that both investments have the same risk, the bond is valued fairly (its price is calculated using present value) and you prefer the investment with the biggest return, a. You should purchase the bond, you will make more money b. You should put the money in the CD, you will make more money c. You are indifferent between the investment options d. Neither, you should put your money in the stock market Can someone explain why C is the correct answer please

Reference no: EM131004527

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