You have the option of purchasing a $1,000, 6% coupon bond with interest payable semiannually and a remaining term of 10 years for $900, or a $1,000 zero coupon bond with a remaining term of 10 years for $500. Interest on the zero is also compounded semiannually. Which bond should you buy? Why?

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The Answer of You have the option of purchasing a $1,000, 6% coupon bond with interest payable semiannually and a remaining term of 10 years for $900, or a $1,000 zero coupon bond with a remaining term of 10 years for $500. Interest on the zero is also compounded semiannually. Which bond should you buy? Why?

You Have the Option of Purchasing a $1,000, 6% Coupon