1. What is the yield, expressed as an effective annual interest rate, of the following bonds? Assume there are 360 days in a year for the sake of simplicity.

Bond X: A zero coupon bond with a face value of $1,000 and 7 years and 325 days remaining that is selling for $560

Bond Y: A 6% coupon bond with a face value of $1,000 selling for $650 with coupon payments made every 6 months. The next coupon payment is in 125 days, and there are 9 total coupons remaining.

Answer rating: 100% (QA)

To calculate the yield of each bond as an effective annual interest rate annual yield we can use the ... View the full answer