QUESTION $2$

Use the attached yield curve. Consider two bonds, both with $7$ years to maturity, but with different coupon rates. Let the two coupon rates be $\backslash (15\backslash \%\backslash )$ and $\backslash (3\backslash \%\backslash ).$ What is the yield to maturity of the $\backslash (15\backslash \%\backslash )$ coupon bond?

yieldcurvexls

$\backslash (6\mathrm{.}17\backslash \%\backslash )$

$5\mathrm{.}95\backslash \%4\mathrm{.}83\backslash \%$

$5\mathrm{.}72\backslash \%$

Use the attached yield curve. Consider two bonds, both with $7$ years to maturity, but with different coupon rates. Let the two coupon rates be $\backslash (15\backslash \%\backslash )$ and $\backslash (3\backslash \%\backslash ).$ What is the yield to maturity of the $\backslash (3\backslash \%\backslash )$ coupon bond?

yieldcurvexls

$5\mathrm{.}97\backslash \%$

$6\mathrm{.}15\backslash \%$

$4\mathrm{.}63\backslash \%$

$5\mathrm{.}75\backslash \%$

QUESTION $4$

Use the attached yield curve. Consider two bonds, both with $7$ years to maturity, but with different coupon rates. Let the two coupon rates be $\backslash (15\backslash \%\backslash )$ and $\backslash (3\backslash \%\backslash ).$ Would the difference in yields imply that one is a better "buy" than the other?

yieldcurvexlsYes, because the $15\backslash \%$ coupon bond has a higher yield.

Yes, because the $\backslash (3\backslash \%\backslash )$ coupon bond has a higher yield.

No$,$ because both coupon bonds pay similar yields.

No$,$ because yield is a poor measure of value.