Question
Consider two $10,000 face-value corporate bonds. One is currently selling for $9,980 and matures in 15 years. The other bond sells for $9,350 and matures
Consider two $10,000 face-value corporate bonds. One is currently selling for $9,980 and matures in 15 years. The other bond sells for $9,350 and matures in 3 years. Calculate the current yield for both bonds if both have a coupon rate equal to 5%. Which current yield is a better approximation of the yield to maturity? (Assume a yearly coupon payment.)
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Principles of Finance
Authors: Scott Besley, Eugene F. Brigham
6th edition
9781305178045, 1285429648, 1305178041, 978-1285429649
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