You have funds that you want to invest in bonds, and you just noticed in the financial pages of the local newspaper that you can buy a $1,000 par value bond for $800. the coupon rate is 10% (with annual payments), and there are 10 years before the bond will mature and pay off its $1,000 par value. you should buy the bond if your required return on bonds with this risk is 12%.

The answer is: Yes, you should buy this bond.

Explanation:

In order to buy the bond, you are going to invest $800

Each year, during 9 consecutive years, you will earn $100 in interest.

At the end of year 10, you will receive $1,000.

To find out if this bond is a good investment, you must calculate its net present value (NPV) using this formula: NPV = ∑(P/ (1+i)t ) – C, were:

The NPV of this investment is $54.80, that means it is good investment for you. Any investment with a NPV ≥ 0 is considered a good investment.

a

explanation:

if it is for a job, then you should learn everything you can about the job, like what does it involve, what qualification is required and how you are the right person for that job. dress appropriately for the interview. get plenty of rest the night before. good luck!