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Compute the current yield on both bonds

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Reference no: EM132955507

Harold Reese must choose between two bonds:

  • Bond X pays $96 annual interest and has a market value of $955. It has 12 years to maturity.
  • Bond Z pays $88 annual interest and has a market value of $940. It has four years to maturity.

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

Problem a. Compute the current yield on both bonds.

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

Reference no: EM132955507

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