Which of the two interest rates is better measure of return

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1. Is the YTM the same thing as coupon rate?

2. Consider a bond with a coupon rate 6% and the yield to maturity 8%. Which of the two interest rates is a better measure of return for someone who holds the bond until its maturity? Explain why?

3. At the dinner table, your father is extolling the benefits of investing in bonds. He insists that as a conservative investor he will make only investments that are safe, and what could be safer that a bond, especially a U.S Treasury long-term bond? What accounts for his view of bonds? Explain why you think he is wrong?

Reference no: EM131848216

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