After winning lottery ticket. Diana is expecting to receive amount of Rs. 100,000 each year for the next 10 years. As an alternate, she can avail option of an immediate payment of Rs.1,000,000. (assuming immediate payment will subject to levied of tax of 10% deduction at source)
a) Which alternative should she pick if the interest rate is 6 %?
Your broker calls to offer you the investment opportunity of a lifetime, the chance to invest in 10 year long-term debt instruments issued by AAA rate Commercial bank. The broker explains that these bonds are entitled to the principal and interest payments but not backed by any security or pool of assets.
Requirements:
List down any four questions you would ask your broker to assess the risk of this investment opportunity?