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Investigation 1 - Investments with probability You are a financial adviser and have been asked to recommend one of two different three-year investment bonds. Bond
Investigation 1 - Investments with probability You are a financial adviser and have been asked to recommend one of two different three-year investment bonds. Bond A is offered by the investor's own bank and has a compound interest rate fixed at 1.5% per annum, compounded semi-annually. Bond B is offered by an online-only bank and is a "with-profit" investment i.e. the interest rate to be paid is set at the end of each year. You are required to prepare a report recommending one of the investment bonds to your client who wants to invest 10,000 Task 1 - Bond A (Maximum Mark 9) Explain what is meant by "compounded semi-annually" and find the equivalent annual interest rate. Calculate how much the client will receive if they invest in Bond A. It is assumed that at the end of each three-year period the investor can reinvest in an identical bond for another three years. Find, using logarithms, how many years it will take until the investment has doubled in value
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