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1 and 2 1. An investor in the 28% tax bracket is trying to decide which of two bonds to purchase. One is a corporate
1 and 2
1. An investor in the 28% tax bracket is trying to decide which of two bonds to purchase. One is a corporate bond carrying an 8% coupon and selling at par. The other is a zero coupon bond yielding 5.5%; this zero coupon bond will be placed in an RSP. Assuming all other relevant factors are equal, which bond should the investor select? 2. What would be the initial offering price for the fol- lowing (assume semi-annual compounding): a. A 15-year zero coupon bond with a yield to maturity (YTM) of 12%. b. A 20-year zero coupon bond with a YTM of 10%Step by Step Solution
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