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An investor must choose between two bonds. Bond A pays $100 annual interest and has a market value of $870. It has 12 years to
An investor must choose between two bonds. Bond A pays $100 annual interest and has a market value of $870. It has 12 years to maturity. Bond B pays $70 annual interest and has a market value of $850. It has 6 years to maturity. Assume the par value of the bonds is $1,000 a. Compute the current yield on both bonds. Note: Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.b. Which bond should the investor select based on your answers to part a? c. A drawback of current yield is that it does not consider the total life of the bond. For example, the approxmiate yield to maturity on Bond A is 12.02 percent. What is the approximate yield to maturity and exact yield to maturity on Bond B. d. Has your answer changed between parts b and c of this question of which bond to select?
b. Which bond should the investor select based on your answers to part a?
c. A drawback of current yield is that it does not consider the total life of the bond. For example, the approxmiate yield to maturity on Bond A is 12.02 percent. What is the approximate yield to maturity and exact yield to maturity on Bond B.
d. Has your answer changed between parts b and c of this question of which bond to select?
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