Posted: October 12th, 2022

math finance

An investor must choose between two bonds: Bond A pays annual interest and has a market value of $925. It has 10 years to maturity. Bond B pays $62 annual interest and has a mar

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ket value of $910. It has two years to maturity.

 

Compute the current yield on Bond A.

 

Compute the current yield on Bond B

 

A drawback of current yield is that it does not consider the total life of the bond. For example, the approximate yield to maturity on Bond A is 8.33 percent. What is the yield to maturity on Bond B?

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