There are two investment alternatives. The first alternative is to buy a 10-year-term 10,000 TL bond for 7,500 TL. The bond yields a nominal 20% coupon payment each semester. Earned coupon payments are deposited into a bank account with a quarterly (3 months) nominal interest yield of 16%. Another alternative is to deposit 7,500 TL into a monthly deferred bank account. What % should be the nominal annual interest rate of this account for the two alternatives to be financially equivalent?

Answer rating: 100% (QA)

To compare the two investment alternatives we need to calculate the present value of the cash flows ... View the full answer