Business, 25.08.2021 01:50 reecedstceklein

Harold Reese must choose between two bonds: Bond X pays $84 annual interest and has a market value of $900. It has 12 years to maturity. Bond Z pays $86 annual interest and has a market value of $770. It has four years to maturity. Assume the par value of the bonds is $1,000. a. Compute the current yield on both bonds.
b. Which bond should he select based on your answers to part a
c. A drawback of current yield is that it does not consider the total life of the bond. For example, the approximate yield to maturity on Bond X is 9.82 percent. What is the approximate yield to maturity on Bond Z? The exact yield to maturity?
d. Has your answer changed between parts b and c of this question?

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