1. John receives $1,000 as a graduation gift from his grandparents. Rather than spend it, he decides to invest it in a two-year bonds than earns 3% simple interest. John doesn't need access to the money right away because he wants to save it for when he's ready to buy a home in about 10 years. Is the bond a wise investment for John? Why or why not? What other investment options does John have?

2. If you had the choice between investing $1,000 in a mutual fund that earns 7.5% compound interest or a bond that earns simple interest at 7.5%, which would you prefer and why?

3. Fill in the table below and show solutions for each:

Fill in the table below and show solutions for each:
Strategy	Principal	Interest Rate	Time	Interest or Return Type	Interest or Return Earned	Total Value
Stock	$10,000	3%	10 Years	Compound
Mutual Fund (portfolio of stocks & bonds)	$1,000	7%	20 Years	Compound
Bond	$100	5%	30 Years	Simple
Stock	$700	10%	1 Year	Compound
Bond	$10,000	3%	10 Years	Simple

Answer rating: 100% (QA)

The bond may not be the wisest investment for John if his goal is to save for a home in approximately 10 years The reason is that the bond offers a simple interest rate of 3 which means the interest i... View the full answer