On April 28, 2014, an investor is deciding between two investment opportunities. He has determined that his investment horizon (i.e. the investment holding period) is only 90 days. Investment I: A negotiable certificate of deposit with a face value of $100,000 issued on January 2, 2014 has a term to maturity of 270 days. The investor can purchase this CD in the money markets on April 29, 2014, which is 117 days after the issue date. The yield on April 29, 2014 is 6.6%, and is expected to decrease to 5.0% at the end of the investor's investment horizon. Investment II: An investment in the shares of Lannister Bank, whose closing price on April 28, 2014 is $37.9 per share. Lannister Bank has decided to issue bonus shares on a one-for-two basis and the ex-bonus price will take effect on April 29. Assume that the investor can purchase the shares at the theoretical valuation on April 29, 2014. The share price is expected to gain $1.2 per share by the time the investor sells the shares. What is the yield to the investor if he chooses Investment I? % Please answer to two decimal places. What is the yield to the investor if he chooses Investment II? % Please answer to two decimal places. Which investment should the investor choose? Enter the corresponding number for your choice: Enter "1" - if you think he should choose Investment Enter "2" - if you think he should choose Investment II Enter "3" - if you think that he should be indifferent Enter "4" - if you think that this can not be determined based on the information provided On April 28, 2014, an investor is deciding between two investment opportunities. He has determined that his investment horizon (i.e. the investment holding period) is only 90 days. Investment I: A negotiable certificate of deposit with a face value of $100,000 issued on January 2, 2014 has a term to maturity of 270 days. The investor can purchase this CD in the money markets on April 29, 2014, which is 117 days after the issue date. The yield on April 29, 2014 is 6.6%, and is expected to decrease to 5.0% at the end of the investor's investment horizon. Investment II: An investment in the shares of Lannister Bank, whose closing price on April 28, 2014 is $37.9 per share. Lannister Bank has decided to issue bonus shares on a one-for-two basis and the ex-bonus price will take effect on April 29. Assume that the investor can purchase the shares at the theoretical valuation on April 29, 2014. The share price is expected to gain $1.2 per share by the time the investor sells the shares. What is the yield to the investor if he chooses Investment I? % Please answer to two decimal places. What is the yield to the investor if he chooses Investment II? % Please answer to two decimal places. Which investment should the investor choose? Enter the corresponding number for your choice: Enter "1" - if you think he should choose Investment Enter "2" - if you think he should choose Investment II Enter "3" - if you think that he should be indifferent Enter "4" - if you think that this can not be determined based on the information provided
