Consider two bonds bond a and bond b bond a has a face


Consider two bonds, bond A and bond B. Bond A has a face value of $1000, matures in one year and sells for $950. Bond B has a face value $1000, matures in one year, pays 6 percent per year and sells for $940. All work must be shown a. Explain how the two bonds differ b. Calculate the yield to maturity on bond A. Explain what does it measure c. If the selling price of bond A falls to $930, what will happen to the yield to maturity on this bond? d. Calculate the yield to maturity on bond B. e. Is yield to maturity on the bond B higher or lower than the coupon rate? Why? f. If bond B selling price increases to $980, what will happen to the yield to maturity on this bond?

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Business Economics: Consider two bonds bond a and bond b bond a has a face
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