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Below is some information for three U.S. Treasury bonds issued on May 16, 2000. The face...

Below is some information for three U.S. Treasury bonds issued on May 16, 2000. The face value of each bond is $1000. Assume that interest compounds annually.

Annual

Coupon Rate Maturity Date Market Price (PB) Yield to Maturity Current Yield

10.75% May 2003 1100.34

6.75% May 2005 1000.16

6.25% May 2030 1001.81

A. Fill in the value of the yield to maturity and the current yield for each bond above.

B. For which bond(s) is the current yield a good approximation of the yield to maturity? Why?

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