Question: Q2: Your uncle Sam asks for your advice on the comparison of the two following bonds: Bond A: a 10-year, 10% annual coupon bond Bond

Q2: Your uncle Sam asks for your advice on the comparison of the two following bonds:

Bond A: a 10-year, 10% annual coupon bond

Bond B: a 10-year, 10% semiannual coupon bond

Please answer the following questions and briefly provide your reasonings.

  1. If all else equal, which bond you would prefer to buy and why? (3 points)
  2. If the proper price for this semiannual bond is $1,000, what would be the proper price for the annual coupon bond? (5 points)

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