Your friend Marvin is excited because he believes hes found an investment bargain. A broker at Quick

Question:

Your friend Marvin is excited because he believes he’s found an investment bargain. A at Quick Cash Investments has offered him an opportunity to buy a bond issued by Galveston Galleries Inc. at a very attractive price. The 30-year bond was issued ten years ago at a of $1,000, paying a rate of 8%. Interest rates have risen recently driving bond prices down, but most economists think they’ll fall again soon driving prices back up. That makes Marvin and his think this bond may be a real money maker if he buys now, holds for a year or two, and then sells. The bonds of companies that were similar to Galveston at the time its bond was issued are now yielding 12%. Galveston’s bondis selling at $300 which the claims is a fantastic bargain. Marvin knows you’re a finance major and has asked your opinion of the opportunity. How would you advise him?

Broker
A broker is someone or something that acts as an intermediary third party, managing transactions between two other entities. A broker is a person or company authorized to buy and sell stocks or other investments. They are the ones responsible for... Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...