Masters Corp. It issues two 18-year bonds. Both bonds are callable at $1,060. The first bond is issued at a deep discount, yielding 14.9% at a coupon rate of 8%. The second bond is issued at nominal value with a coupon rate of 16.50%.

A. What is the yield to maturity of the bond? (Round your answer to 2 decimal places.)

yield to maturity %

B. If you expect rates to drop significantly over the next two years, which bond would you choose to hold?

	16.50% Coupon Bonds
	8% coupon rate bond

Answer rating: 100% (QA)

A To calculate the yield to maturity YTM of the bond issued at a deep discount we can use the follow... View the full answer