Suppose one of your classmates is deciding between a corporate bond and a municipal bond. Given the bond descriptions below, which bond would you recommend if her only decision criterion were yield to maturity (YTM)? Ignore the tax advantages of municipal bonds and assume that the default risk of the two bonds is the same. Assume annual compounding throughout.

1. The corporate bond has a time to maturity of 6 years, and it pays coupons annually. The annual coupon rate of the bond is 4.7%. The bond is selling for $972.57 and it has a face value of $1,000. Assume that the first coupon is due exactly 1 year from now. (Hint: Using Excel may help)

2. The municipal bond is to mature in 10 years. It is a zero coupon bond with a face value of $1,000. The bonds current price of $562.43.