You are offered a note that pays $1,000 in 15 months (or 456 days) for $850....

You are offered a note that pays $1,000 in 15 months (or 456 days) for $850. You have $850 in a bank that pays a 6.76649% nominal rate, with 365 daily compounding, which is a daily rate of 0.018538% and an EAR of 7.0%. You plan to leave the money in the bank if you don’t buy the note. The note is riskless. Should you buy it?

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jeff jeffy answered 2 months ago

Suppose someone offered to sell you a note calling for the payment of $1,000 in 15...

Suppose someone offered to sell you a note calling for the payment of $1,000 in 15 months (or 456 days). They offer to sell it to you for $850. You have $850 in a bank time deposit that pays a 6.76649% rate with daily compounding, and you plan to leave the money in the bank unless you buy the note. The note is not risky and you are sure it will be paid on schedule. Should you buy the note?...

1. Suppose someone offered to sell you a note calling for the payment of $1,000 15...

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