Question: You have two bond options: Option 1 - AAA Rated bond paying a 5% coupon rate Option 2 - CCC Rated bond paying a 5%

You have two bond options:

Option 1 - AAA Rated bond paying a 5% coupon rate

Option 2 - CCC Rated bond paying a 5% coupon rate.

Both bonds have a ten year maturity.

Which bond would you expect would have a higher YTM?

Option 1

Option 2

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