Hankla Company plans to purchase either (1) zero-coupon bonds that have ten years to maturity, a par

Question:

Hankla Company plans to purchase either (1) zero-coupon bonds that have ten years to maturity, a of $100 million, and a purchase price of $40 million, or (2) bonds with similar default risk that have five years to maturity, a 9 percent rate, a of $40 million, and a purchase price of $40 million.
Hankla can invest $40 million for five years. Assume that the market's required return in five years is forecasted to be 11 percent. Which alternative would offer Hankla a higher (or yield) over the five-year investment horizon?
Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...