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Assume that an investor is looking at two bonds: Bond A is a $1,00020-year, 9.5 percent bond that pays coupons semi-annually. The bond is priced
Assume that an investor is looking at two bonds: Bond A is a $1,00020-year, 9.5 percent bond that pays coupons semi-annually. The bond is priced to yield 11 percent, compounded semi-annually. Bond B is a $1,00020-year, 8 percent bond that pays coupons annually. The bond is priced to yield 7 percent, compounded annually. Both bonds are callable after 5 years at a price of $1,045. a. Which bond has the higher current yield? b. Which bond has the higher yield to maturity (YTM)? c. Which bond has the higher yield to call (YTC)? a. Which bond has the higher current yield? Bond has the higher current yield because the current yield of Bond A is percent and the current yield of Bond B is percent. (Use the TI BA II Plus financial calculator, and enter your answer rounded to two decimal places.)
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