Discussion – 1
Assume that you have a short investment horizon (less than 1 year). You are considering two investments: a 1-year Treasury security and a 20-year Treasure security. Which of the two investments would you view as riskier. Explain your answer.
Banks and other lenders are required to disclose a rate called the APR. What is that rate? Why did Congress require it to be disclosed? Is it the same as the effective annual rate? If you were comparing the costs of loans from different lenders, could you use their APRs to determine the loan with the lowest effective rate? Explain your answer.