GAMA Corp has two outstanding bond issues - Bond L and Bond S. Both bonds pay a $100 annual interest plus a $1,000 face value at maturity. Bond L has a maturity of 15 years and Bond S has a maturity of 1 year. The value of each of these bonds when the going rates of interest (yield to maturity) are 8% and 12% is calculated. Which of these bonds should you decide to sell today so that it gives maximum returns?


Bond L with a yield of 8%


Bond L with a yield of 12%

✕ Incorrect
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Incorrect. Please determine the PV of the bonds for each situation using the given inputs and then compare to find the bond with the highest price.


Bond S with a yield of 8%


Bond S with a yield of 12%