Investment Help.?

Ethan is an investment broker. Recently he contacted potential investors and offered to sell them bonds that were paying an 8% annual rate of interest. He noted that the bonds were paying a much higher return than other investments and that similar bond were selling at a real rate of 6% interest. The bonds had a 10-year maturity and paid interest semiannually. Several investors purchased the bonds because of the high rate of interest but later were concerned to learn that the maturity value of $1000 per bond was considerably less than the $1350 they had paid for each bond.

Compare the price of the bonds sold by Ethan to bonds yielding a real rate of 6%. What was the approximate real rate of return earned by investors? Did they have a right to be concerned about their investments? Do you see any ethical problems with Ethan鈥檚 sales pitch?

sounds like your school homework

Tags

　　Business Investment 　　Business financing 　　Business Invest 　　Business Debt 　　Bond Investment 　　Angel Funds 　　Alternative Investment

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