Harold Reese must choose between two bonds:

Bond $x$ pays $$80$ annual interest and has a market value of $$855.$ It has $12$ years to maturity.

Bond $Z$ pays $$70$ annual interest and has a market value of $$880.$ It has four years to maturity.

Assume the par value of the bonds is $$1,000.$

a$.$ Compute the current yield on both bonds. $($Do not round intermediate calculations. Input your answers as a percent rounded to $2$

decimal places.$)$

b$.$ Which bond should he select based on your answers to part $a?$

Bond $x$

Bond Zc$.$ A drawback of current yield is that it does not consider the total life of the bond. For example, the approximate yield to maturity on

Bond $x$ is $10\mathrm{.}09$ percent. What is the approximate yield to maturity on Bond $Z?$ The exact yield to maturity? $($ Do not round

intermediate calculations. Input your answers as a percent rounded to $2$ decimal places.$)$

d$.$ Has your answer changed between parts $b$ and $c$ of this question?

Yes

No