After graduating from York University with a BBA, you were able to find a well-paying job and now have saved $200,000 an

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After graduating from York University with a BBA, you were able
to find a well-paying job and now have saved $200,000 and now want
to invest this money. You recall from your Introduction to
Managerial Finance class that you could invest in either stocks or
bonds. Just like Warren Buffet you believe in value investing,
whereby you search out investments that are priced below fair
value. You do some research and find two investments one is a bond
the other is a stock. Using the tools you learned in your
Managerial Finance class, which investment is currently mispriced
and would provide a better return? The first investment is a bond,
which is currently selling at $1,052.50. This bond is issued by BCE
which has a solid AA credit rating. The bond has a coupon yield of
10% paid semiannually, with a $1,000 face value. It has 12 years to
maturity, with a yield of 9%. The other investment is a stock,
which is currently trading at $116.35 per share. This stock is also
a solid Canadian company that pays an annual dividend of $8 per
share. Analysts are expecting the dividend to grow at a 3% rate,
and the market rate of return on similar types of stocks is 10%
Would your decision change if the bank of Canada would increase
interest rates by 2% next month which would increase both the Yield
on the bond and the market rate on the stock. If so, why? If you
plan to sell your stock and/or bond in 3 years would your decision
change? How would taxes play a role in this decision?