Question: During the slideshow, Jill often made reference to a corporate bonds nominal yield and its effective yield, leading to some clients being confused about the
During the slideshow, Jill often made reference to a corporate bond’s “nominal” yield and its “effective” yield, leading to some clients being confused about the definition and interpretation of each term. How should Jane explain the difference between the “nominal” and effective yield to maturity for each bond listed in Table 1? Which one should the investor use when deciding between corporate bonds and other securities of similar risk? Please explain.
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