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3. Calculate the yield to maturity on a zero coupon (discount) bond that sells for $875 and matures in 5 years. Calculate this using both

3. Calculate the yield to maturity on a zero coupon (discount) bond that sells for $875 and matures in 5 years. Calculate this using both annual and semi-annual assumptions.

4. Calculate the yield to maturity on a corporate bond that sells for $1,100, pays an 8% coupon, matures in 5 years and pays $1,000 at maturity. Calculate this using both annual and semi-annual assumptions.

5. Assuming they have equal risk, which is the better investment out of the four bonds described in questions 3 and 4?

Use financial calculator and list the inputs. Ex. PV = 900. FV = 1,000. n = 5.

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