You have a choice of investing $50,000 in a 12%, 10-year semi-annual bond, or in shares of TIM Inc., paying a quarterly dividend of $1.00 per share starting the quarter after you buy them. TIM shares currently sell for $25.00 per share.
Which is the better investment, assuming the current interest rate is 8% and assuming you would hold the TIM shares for 10 years, at which time they would be worth $75 each?
This question was answered on: Jul 11, 2017
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