One bond has a coupon rate of 7.6%, another a coupon rate of 9.3%. Both bonds pay interest annually, have 14-year maturities, and sell at a yield to maturity of 8.0%.
a. |
If their yields to maturity next year are still 8.0%, what is the rate of return on each bond? (Do not round intermediate calculations. Enter your answers as a percent rounded to 1 decimal place.)
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Rate of return |
Bond 1 |
% |
Bond 2 |
% |
b. |
Does the higher-coupon bond give a higher rate of return? |
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Yes |
One bond has a coupon rate of 7.6%, another a coupon rate of 9.3%. Both bonds pay interest annually, have 14-year maturities, and sell at a yield to maturity of 8.0%.
a. |
If their yields to maturity next year are still 8.0%, what is the rate of return on each bond? (Do not round intermediate calculations. Enter your answers as a percent rounded to 1 decimal place.)
|
|
Rate of return |
Bond 1 |
% |
Bond 2 |
% |
b. |
Does the higher-coupon bond give a higher rate of return? |
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|
|
|
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