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Fincorp issues two bonds with 15 -year maturities. Both bonds are callable at $1,075. The first bond is issued at a deep discount with a
Fincorp issues two bonds with 15 -year maturities. Both bonds are callable at $1,075. The first bond is issued at a deep discount with a coupon rate of 6% and a price of $510 to yield 14.2%. The second bond is issued at par value with a coupon rate of 15.50% Required: a. What is the yield to maturity of the par bond? (Round your answer to 2 decimal places.) b. If you expect rates to fall substantially in the next two years, which bond would you prefer to hold? Bond with a coupon rate 15.50% Bond with a coupon rate 6%
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