Question
Two corporate bonds, issued respectively by F Ltd and G Ltd, have the same face value of $10,000 and the same term to maturity of
Two corporate bonds, issued respectively by F Ltd and G Ltd, have the same face value of $10,000 and the same term to maturity of 7 years. F Ltd’s bonds have a coupon rate of 8% per annum, payable half-yearly, and G Ltd’s bonds have a coupon rate of 7.8% per annum, payable bi-monthly (that is, every 2 months). Calculate the effective annual return (EAR) on each bond.
[Show each answer as a percentage, correct to 2 decimal places.]
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Corporate Finance Core Principles And Applications
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
6th Edition
1260571122, 978-1260571127
