Joan purchases a 30 year Federal Government bond for $10,000 that pays 4 percent annual interest. Jim purchases $20,000 worth of 30 year Corporate bonds that pay 7 percent annual interest. Joan's goal is to earn $400 per year on her investment, and Jim's goal is to earn $1,400 per year on his investment.
a. Is Joan or Jim more efficient? Why?
b. Is Joan or Jim more effective? Why?