What is the annualized yield-to-maturity

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Question - ABC Corp has two 10-year bonds outstanding, one with a 15% coupon and the other with a 3% coupon (both annual rates). Both bonds pay their coupons semi-annually. The price of the 15% bond is $131.16 and of the 3% is $56.38.

a. What is the annualized yield-to-maturity on the 15% bond?

b. What is the annualized yield-to-maturity on the 3% bond?

c. If the yield-to-maturity on both bonds increases by 1%, do the prices of the two bonds change by the same percentage? If not, why not?

Reference no: EM132979313

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