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A friend of yours ask you for a piece of advice. He has some money saved and wants to invest on a safe investment. He
A friend of yours ask you for a piece of advice. He has some money saved and wants to invest on a safe investment. He shows you two different bonds to invest in and asks you for your opinion. The two bonds are: Bond A: S&P Rating BB; Coupon rate 6%, maturity 6 years; YTD is 9% Bond B: S&P Rating AAA; Coupon rate 4%, maturity 5 years; YTD is 3% a) What do you know about the two bonds in respect of risk etc? b) Are these bonds Premium Bonds or Discount Bonds or.? c) What advice do you give to your friend? Why?
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