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Saving for their childrens education To establish funds for a RESP (to be opened upon the birth of either Jack or Jill, whomever comes first)

Saving for their childrens education

To establish funds for a RESP (to be opened upon the birth of either Jack or Jill, whomever comes first) John has suggested purchasing bonds as a lower risk alternative to more volatile funds. John has identified a 20-year bond with a face value of $10,000 which pays a coupon rate of 9% compounded semi-annually. The bond has 15 years remaining until maturity and a current yield rate of 8%. John can purchase the bond for $10,125. Is this good value?

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