Business: John has to decide whether to buy a zero-coupon bond with very little risk that costs $950 and will pay $1085 in one year or put his money in a savings account with an annual interest rate of 12%. Compute the difference in the rate of return of the two investments. Round your answer to one decimal place Which of the two investments will John prefer? O the savings account O the zero-coupon bond

John has to decide whether to buy a zero-coupon

angeladominguezgarci

19.01.2022

Different is favorable to the zero-coupon by 2.2%

I would prefer to invest in the zero-coupon as their yield is higher

Explanation:

we divide the future value of the zero coupon with ther current market value to determinate the rate

$\frac{FV}{nominal} =1 + r\\\frac{FV}{nominal} -1 = r\\\\\frac{1,085}{950} -1 = r$

r = 0,14210 = 14.2%

the saving account yields 12% which is lower than the zero coupon rate thereofre I would be better to ivnest in the zero-coupon.

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SupremeDiaz17

03.07.2022

The first bike: $ 80

The fourth bike: $ 20

The sixth bike: $ 50

The seventh bike: $ 60

Explanation:

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