Question: NO EXCEL. ONLY manual calculations with formulas mentioned. Which bond would you prefer to hold as an investment? Calculate the YTM of each and explain

NO EXCEL. ONLY manual calculations with formulas mentioned.

Which bond would you prefer to hold as an investment? Calculate the YTM of each and explain your preferred investment strategy and risks associated (3 Marks).

  1. A corporate coupon bond face value USA $20,000 purchased for USA $18000 with a term of 25 years Interest rate 5% per annum and to be sold at 16 years (8 Marks)
  2. A USA federal government discount one year to maturity bond face value USA $20000 purchased for USA $18000 and sold at 270 days (8 Marks).

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