Mike and Dave are 2 brothers Mike purchased, for a $100 price, a $100 face value bond that pays interest annually at 10 The principal is due and payable at the end of 5 years Dave purchased, for a $100 price, a deeply discounted zero coupon bond that pays nothing annually, but that has a final lump sum payment of $161 05 at the end of 5 years What are the yields to maturity (YTM) of both bonds Which pays a higher yield How is the YTM different than the Internal Rate of Return (IRR)

Question

Mike and Dave are 2 brothers  Mike purchased, for a $100 price, a $100 face value bond that pays interest annually at 10   The principal is due and payable at the end of 5 years  Dave purchased, for a $100 price, a deeply discounted zero coupon bond that pays nothing annually, but that has a final lump sum payment of $161 05 at the end of 5 years  What are the yields to maturity (YTM) of both bonds  Which pays a higher yield  How is the YTM different than the Internal Rate of Return (IRR)

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Question

Mike and Dave are 2 brothers. Mike purchased, for a $100 price, a $100 face value bond that pays interest annually at 10%. The principal

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