Question 1 Report
Table 1 shows two bonds offered through an online financial market. A bond is a loan made by investors to an organisation.
Table 1
(a) The table containing the bond rates is not visible in the supplied question text, but the mark scheme identifies Bond A’s rate as 4%. Annual interest is:
\[\$2000\times\frac{4}{100}=\$80\]
Annual interest on Bond A is $80 [1].
(b) Bond B [1] offers the higher annual percentage return, according to the supplied table and mark scheme.
(c) Bond B may pay a higher interest rate because the new firm has a greater risk of failing to repay investors, or its profits are less certain [1]. Investors generally require a higher return as compensation for accepting higher risk.
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