Day count/Compounding question: There are two one-year $10,000 investments, assuming both are default-free investments: a. Investment I pays coupon of 6.00%, paying semi-annually with day-count of 30/360; b. Investment II pays coupon of 6.10%, paying annually with day-count of Actual/365; You can purchase each investment at price of 100, or pay $10,000 upfront. Which investment do you prefer? Why?

Answer rating: 100% (QA)

To determine which investment is preferred we need to compare the yield of each investment The yield ... View the full answer