Consider two $10,000 face-value corporate bonds. One is currently selling for $9,980 and matures in 15 years.
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Consider two $10,000 face-value corporate bonds.
One is currently selling for $9,980 and matures in 15 years. The other bond sells for $9,350 and matures in 3 years. Calculate the current yield for both bonds if both have a coupon rate equal to 5%. Which current yield is a better approximation of the yield to maturity? (Assume a yearly coupon payment.)
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Related Book For
Financial Markets And Institution
ISBN: 9781292459547
10th Global Edition
Authors: Frederic Mishkin, Stanley Eakins
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