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. Yld. Vol Close Net Chg.
7.5
128 3
ABC 7-15
104
2
4
3
8.4
17
1
XYZ 7-15
100-
2 4
a
What price would you pay for each bond if you purchased one of them today? (Remember the face value is sh000.)
ABC: $1047.50
XYZ: $1005.00
b. ABC: $1104.75
XYZ: $1100.50
ABC: $872
XYZ: 1983
d ABC: $750
C.