Clarks broker has suggested that she invest in bonds of one of the following companies:...
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Finance
Clarks broker has suggested that she invest in bonds of one of the following companies:
Issuer Price
Windsor Ltd. $1,100
Edmonton Ltd. $1,500
Windsors bonds were issued 9 years ago with a maturity date of 40 years. The bond has a coupon rate of 15% and pays interest semiannually.
Edmontons bonds were issued 10 years ago with a maturity date of 40 years. The bond has a coupon rate of 16% and pays interest annually.
Required: If the yield on similar bonds is approximately 12% which bond should Clark invest in? Show all calculations. (8 marks)
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