10. Consider two face-value corporate bonds. One is currently selling for and matures in 15 years. The...

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10. Consider two face-value corporate bonds. One is currently selling for and matures in 15 years. The other bond sells for 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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Financial Markets And Institutions

ISBN: 9780134519265

9th Edition

Authors: Frederic S. Mishkin, Stanley G. Eakins

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