Question

Drew has invested in Iwad Records. He owns three par value $1,000 bonds from them, which are currently selling for 99.773. He also owns 600 shares of Iwad Records stock, the current value of which is $5.28 per share. If, when Drew made his investment, Iwad Records bonds had a market price of 94.561 and stock in the same company sold for $5.00 per share, which investment has increased in value more, and by how much?

Answer 1

First, find the number of investment, then use that # to find how much. If 5.28 is for per share, the current value would be about 11.50 of an increase.

Answer 2

Answer:

Investment in share has increase more in value, by $11.64, in comparison to the investment in bond.

Explanation:

The rise in value of the bond:

The investment cost of the bond: 3 x 1,000 x 94.561% = $2,836.83

The current value of the bond: 3 x 1,000 x 99.773% = $2,993.19

=> Rise in value of the bond = 2,993.19 - 2,836.83 = $156.36

The rise in value of the shares:

The investment cost of the share: 600 x 5 = $3,000

The current value of the shares: 600 x 5.28 = $3,168

=> Rise in value of the shares = 3,168 - 3,000 = $168.

Thus, the investment in share has increase more in value, that is by $11.64 higher ( calculated as: 168 - 156.36), in comparison to the investment in bond.