Your current CD matures in a few days. You would like to find an investment with a higher rate of return than the CD. Stocks historically have a rate of return between 10% and 12%, but you do not like the risk involved. You have been
looking at bond listings in the newspaper. A friend wants you to look at the following corporate bonds as a possible
investment.
Bond
Cur. Yid. Vol Close Net Chg.
7.5
128
ABC 7-15
104-
2
4
3
8.4
1
XYZ 7- 15
100-
2
3
What price would you pay for each bond if you purchased one of them today? (Remember the face value is $1000.)
a. ABC: $1047.50
XYZ: $1005.00
b. ABC: $1104.75
XYZ: $1100.50
C. ABC: $872
XYZ: $983
d. ABC: $750
XYZ: $840