Reference no: EM132939011

Problem - You are speaking to a high school class on accounting as a career field. One of the students, Taylor, asks a question. She explains her Aunt Abbie gave her a $1,000 and told her to invest it wisely. In the high school class, they are studying bonds, similar to the information in this module. Taylor shares: one evening Taylor is having a conversation with two friends, and she mentions her interest in investing the $1,000 in corporate bonds.

Her friend, Jacob, says he saw a website where corporate bonds were selling at a premium. Since the bonds were selling at a premium, the bond investment would yield more than the stated bond rate of return, and this would be a good investment. Taylor was very interested because her Aunt would be proud of her for making a good investment with the money.

Then Taylor's other friend Fatima says, "Are you serious? Don't you know corporate bonds are very risky investments? You will lose everything." Taylor's Aunt Abbie would not want her to lose the $1,000. Taylor shares she does not like risk.

Based on your current knowledge, address both friend's viewpoints about investing in corporate bonds. Should Taylor take Jacob's advice or Fatima's advice or neither? Explain why.