5. During the slideshow, Jill often made reference to a corporate bond's nominal yield and its effective yield, confusing some cli ents about the definition and interpretation of each term. How should Jane explain the difference between 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 .

Table 1:

Table 1 Corporate Bond Information Face Value Coupon Rate Years Until Maturity Quoted Price Issuer Sinking Fund Rating Call Period 6% AAA $809.10 20 Yes 3 Years 0% AAA 20 Yes NA ABC Energy $1,000 ABC Energy $1,000 TransPower $1,000 Telco Utilities $1,000 $211.64 $1025.00 10% AA 20 Yes 5 Years 12% AA $1300.00 30 No 5 Years Table 1 Corporate Bond Information Face Value Coupon Rate Years Until Maturity Quoted Price Issuer Sinking Fund Rating Call Period 6% AAA $809.10 20 Yes 3 Years 0% AAA 20 Yes NA ABC Energy $1,000 ABC Energy $1,000 TransPower $1,000 Telco Utilities $1,000 $211.64 $1025.00 10% AA 20 Yes 5 Years 12% AA $1300.00 30 No 5 Years