Consider the following information:
Bond A Bond B
Annual coupon rate 8% 11...
Business, 27.05.2020 21:06 justbepunky
Consider the following information:
Bond A Bond B
Annual coupon rate 8% 11%
Coupon payment frequency Semiannually Quarterly
Years to maturity 4 4
Price (per 100 of par value) 96.00 104.00
YTM 9.22% 9.78%
The analyst believes that Bond B has a little more risk than Bond A. When yields are annualized for quarterly compounding, the compensation for the additional risk Bond B offers relative to Bond A is closest to:
A. 56.2 bps
B. 66.4 bps
C. 68.2 bps
Answers: 2
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