Answer:
10% of the investment = $1,000
Explanation:
The bond guarantees a 10% rate of return and you have $10,000 to invest.
The other investment offers similar risk, so you should demand at least the same rate of return = 10% or $1,000
Investors are risk averse, and the higher the risk, the larger the return expected form an investment. If you have two investments with the same level of risk, you should be able to demand the same return from both investments. If the risk of one investment is higher, then you should demand a higher return from than investment. On the other hand if the investment has a lower risk, you should demand a lower rate of return.
