Question
If the market price of a treasury bond is currently $1100 per unit and the stock of a company is trading at $10 per share,
If the market price of a treasury bond is currently $1100 per unit and the stock of a company is trading at $10 per share, which investment should be taken to raise funds necessary for a project/campaign, please assist how I can determine which is more favorable the treasury bond or the trading stock and why?
Treasury Bond has a face value of $1000, 10 years to maturity, annual coupons of $50 and yield to maturity is 4% per year
ABC ordinary shares, just paid a dividend of $0.50 per share. with dividend growth prospects of 5% per year and required rate of return at 10%
I hope that makes sense, I am lost with this one!
Thank you for your assistance.
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