Given the opportunity to invest in one of these two bonds listed below, which

would you purchase?

Bond ABC : pays $7\%$ semiannually and has $10$ years to maturity. The market requires

an interest rate of $8\%.$ The market price of Bond XX is now $$1000.$

Bond XYZ: pays $8\%$ semiannually and has $5$ years to maturity. The market requires

an interest rate of $8\%.$ The market price of Bond YY is now $$950.(12$ points$)$