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4. You are an avid investor in fixed income securities. Your portfolio of bond does not have bonds from AAA rated companies. You are considering
4. You are an avid investor in fixed income securities. Your portfolio of bond does not have bonds from AAA rated companies. You are considering purchase of AAA rated bond. Two such bonds from AAA rated companies, Bond A & Bond B are available in the market that have following features: Bond A $100.00 Face Value Coupon Rate Periodicity of coupon Time remaining for maturity 15% Semi-annual 3 years $110 Bond B $120.00 12% Semi-annual 4 years $130 Current market price Your expectation of return from the investment in AAA rated bonds is 10%, which is slightly above the yields in the government securities. Which of the bond should you buy and why? Assume that you are indifferent to the investment horizon of 3 or 4 years
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