Question
You can purchase a 10 year,4.250% coupon note that pays interest quarterly and has a quoted yield to maturity of 3.800%. However, you prefer to
You can purchase a 10 year,4.250% coupon note that pays interest quarterly and has a quoted yield to maturity of 3.800%. However, you prefer to invest in semiannual coupon bonds.
(a) What quoted yield to maturity on a semiannual coupon bond would make you indifferent between that bond and the quarterly coupon bond described above?
(b) There is a special name for the yield to maturity on a semiannual coupon bond. What is it?
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Financial Economics
Authors: Zvi Bodie, Robert C Merton, David Cleeton
2nd Edition
0558785751, 9780558785758
