Suppose you are considering investing in either of two AAA corporate bonds. One will provide you with an annual 8% coupon payment, while the other only pay's a 6% coupon. Assume current yields for AAA bonds are 7%. Explain why your yield to maturity will be 7%, regardless of which bond you purchase?

Answer rating: 100% (QA)

All bonds are assigned ratings that qualify the quality of the issue The ma... View the full answer