Question: 2 b) Bonds A and B are both with a 10-year maturity, 9o/o annual coupon and with 1 ,000 as the par value. Bonds A

2 b) Bonds A and B are both with a 10-year maturity, 9o/o annual coupon and with

1 ,000 as the par value. Bonds A and B are sold for 787.00 and 1 ,134.20 respectively.

i) What are the yields to maturities of bonds A and B? (6 marks)

ii) Compare the yield to maturities of Bonds A and B with the coupon rate and discuss any differences that you may have found. (6 marks)

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