XY 5 ¼ percent, with interest paid annually for 20 years.
AB 14 percent, with interest paid annually for 20 years.
Which bond has a current yield that exceeds the yield to maturity?
Which bond may you expect to be called? Why?
If CD, Inc. has a bond with a 5 ¼ percent coupon and a maturity of 20 years but which was lower rated, what would be its price relative to the XY, Inc. bond? Explain.
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