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Problem:

Suppose you have the choice of investing in (A) a zero-coupon bond, which costs $500 today, pays no coupon during its life, compounds semi-annually, and then pays $1,000 after 10 years, or (B) a bond which costs $1,100 today, pays $45 in interest semiannually, and matures at the end of 10 years.

Required:

Question: What are the Semi-Annual yields to maturity of the two bonds?

Note: Show all workings.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91175191

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