Which has a higher ytm and why

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Reference no: EM13155877

If I have two bonds A and B:

Bond A - Face value of $100, 1 year maturity, and sells for $95

Bond B - Face value $100, 1 year maturity, pays 6% per yr and sells for $94

1. What are the differences between the two (type of bonds)?

2. How do I calculate the yield to maturity for both?

3. Which has a higher Y.T.M. and why?

4. What would be the real return on bond A and B if the actual inflation rate is 3%?

Reference no: EM13155877

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