You are considering between two bonds, A and B. Both bonds are 1-year bonds

and have a face value of $1000. Bond A pays a 10% semiannual coupon while bond B pays an

annual coupon of 10% (i.e. at maturity bond B pays $1100). Bond A is priced at par while

bond B is priced at 0.5% premium (i.e. at $1,005).

(a) Which bond will you buy (Show calculations)

Answer rating: 100% (QA)

Lets calculate the total return on each bond Bond A Face Value 1000 Coupon Rate 10 semiann... View the full answer