Question

Which of these bonds is cheaper on a relative value basis i.e. which one has higher...

Which of these bonds is cheaper on a relative value basis i.e. which one has higher yield:
Bond A: Maturity 10yr, Coupon 5.75%, Price 83-20+;
Bond B: Maturity 9yr, Coupon 6%, Price 82-12.
For coupons rate is annual and coupons are paid semiannually.

Homework Answers

Answer #1

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BOND B HAS HIGHER YIELD (8.93%) COMPARED TO BOND A (8.25%)

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