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 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 ignores the fact that the costs are incurred today, but the benefits occur in one year's time.
C) It does not consider whether the $10 000 will be needed elsewhere.
D) It does not consider the value of the $10 000 in one year's time if invested elsewhere.
Correct Answer:
Verified
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