An investor is comparing two bonds

of similar structure from the same

issuer. Which bond should the

investor buy?

a. the bond maturing last as that has the lowest risk

b. the bond with the highest price as that offers the highest return

c. the bond with the highest coupon and the lowest yield

d. the bond with the highest yield if the two bonds have the same maturity date

Question

Business

Kaeden Wu

11 December, 00:55

An investor is comparing two bonds

of similar structure from the same

issuer. Which bond should the

investor buy?

a. the bond maturing last as that has the lowest risk

b. the bond with the highest price as that offers the highest return

c. the bond with the highest coupon and the lowest yield

d. the bond with the highest yield if the two bonds have the same maturity date

+3

Answers (1)

Know the Answer?

Jojo · Answer 1

d. the bond with the highest yield if the two bonds have the same maturity date

Explanation:

Bonds are defined as a type of investment where the investor lends a certain amount of payment to another client, and the client makes a pre-decided fixed amount of payment on a regular basis. This fixed payment is considered as "fixed income" for the lender. In the case of bonds, it is always advised to make investments to only those bonds which provide the highest yield (as is true in this case). Bonds with high yields provide the investor with high rate of return.