Asked by Rajini
Some institutional investors prefer zero coupon bonds over coupon bonds of the same maturity (and same quality). They will ever purchase a lower YTM zero coupon than the same maturity coupon bond. Which statement below best describes why they do this? (Points: 4)
Coupon payments every 6 months can be reinvested in an efficient manner.
Coupon bonds have less reinvestment risk than zero coupon bonds.
zero coupon bond have no reinvestment risk.
This is the best math formula we have; and universally accepted.
All of the above statements are correct.
Coupon payments every 6 months can be reinvested in an efficient manner.
Coupon bonds have less reinvestment risk than zero coupon bonds.
zero coupon bond have no reinvestment risk.
This is the best math formula we have; and universally accepted.
All of the above statements are correct.
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