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You are considering two assets. The first is a discount bond with face value $10,000 maturing in one year that is priced at $9,500 today.
You are considering two assets. The first is a discount bond with face value $10,000 maturing in one year that is priced at $9,500 today. The second is an Apple stock priced at $300. Next year, the stock has a 0.5 probability to be $325 and 0.5 probability to be $305. Assuming that the level of liquidity for the two assets are the same.
What should you do? a) Buy the bond. b) Buy the stock. c) It is unclear which asset is better. d) There is not enough information to answer this question.
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