Which instrument should you purchase

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Reference no: EM131235575

The bid quote on a corporate bond is $212; the ask is $215. You expect this bond to return its promised 15% per annum for sure.

In contrast, T-bonds offer only 6% per annum but have no spread. If you have to liquidate your position in 1 month, what would a $1 million investment be worth in either instrument? Which instrument should you purchase?

Reference no: EM131235575

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