An investor has the opportunity to buy a $10,000 government bond which is guaranteed to yield 6.5% interest in one year's time
The investor decides to make the investment as there is a net difference between the absolute cost and benefit. Which of the following is NOT a reason that the investor's decision may be flawed?
A) It does not consider the current market interest rate.
B) It does not consider the fact that though costs are incurred today, the benefits occur in one year's time.
C) It does not consider the value of the $10,000 in one year's time if invested elsewhere.
D) It does not consider whether the $10,000 will be needed elsewhere.
Answer: D
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