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Question 1 consider the bonds of ibm coupon 1 term 3 years

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Reference no: EM13381352

Question 1: Consider the bonds of IBM: coupon 1%, term 3 years, issued in August 2010. Why do investors buy these bonds with only 1% rate of return? Give some reasons to justify your answer.

Question 2: IBM stock sells at about $195 per share and pays an annual dividend of $3.40. What is its annual dividend yield? Would you rather buy the stock or the bonds of IBM? Give some reasons.

Reference no: EM13381352

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