An investor must choose between two bonds: Bond A pays $80 annual interest and has...
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An investor must choose between two bonds: Bond A pays $80 annual interest and has a market value of $855. It has 12 years to maturity. Bond B pays $85 annual interest and has a market value of $750. It h eight years to maturity. Assume the par value of the bonds is $1,000. a Compute the current yield on both bonds. (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.) Current Yleld Bond A Bond B b. Which bond should she select based on your answers to part a? Bond B Bond A c. A drawback of current yield is that it does not consider the total He of the bond. For example, the approximate yield to maturity on Bond A is 10.09 percent. What is the approximate yield to maturity on Bond B? The exact yield to maturity? (Use the approximation formula to compute the approximate yield t calculator method to compute the exact yield to maturity. Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.) maturity and uset Approximate ield to maturity Exact vield to maturity d. Has your answer changed between parts b and c of this question in terms of which bond to select
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