Masters Corp. issues two bonds with 20-year maturities. Both bonds are callable at $1,050. The first bond is issued at a
Posted: Sun May 29, 2022 4:44 pm
Masters Corp. issues two bonds with 20-year maturities. Both
bonds are callable at $1,050. The first bond is issued at a deep
discount with a coupon rate of 7% to yield 16.0%. The second bond
is issued at par value with a coupon rate of 18.00%
a. What is the yield to maturity of the par
bond? (Round your answer to 2 decimal
places.)
b. If you expect rates to fall substantially
in the next two years, which bond would you prefer to hold?
multiple choice
Bond with a coupon rate 7%
Bond with a coupon rate 18.00%
bonds are callable at $1,050. The first bond is issued at a deep
discount with a coupon rate of 7% to yield 16.0%. The second bond
is issued at par value with a coupon rate of 18.00%
a. What is the yield to maturity of the par
bond? (Round your answer to 2 decimal
places.)
b. If you expect rates to fall substantially
in the next two years, which bond would you prefer to hold?
multiple choice
Bond with a coupon rate 7%
Bond with a coupon rate 18.00%