You are examining two bonds, each with a par value of $1,000, as potential investments.  They are: (i)Bond X:A bond with seven years to maturity that pays 10 percent per annum compounded semi-annually.  The current market yield for this bond is 7 percent compounded semi-annually and the current market price of the bond is $750.00 (ii)Bond Junk:A bond with ten years left to maturity that pays 12 percent per annum compounded semi-annually. The current market yield for this bond is 10 percent compounded semi-annually and the current market price of the bond is $400.00.

What bond(s) should you invest in?  Explain your answer fully.

Answer rating: 100% (QA)

For Bond X the coupon rate is 10 per annum compounded semiannually and the bond has seven years left ... View the full answer