Two bonds are available on the market as follows: Bond 1: Face value $250, 5 years to maturity at a (simple) interest rate of 5%. Bond 2: Face value $350, 3 years to maturity at a (simple) interest rate of r. Given that both bonds yield the
Unitary Method
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Two bonds are available on the market as follows:
- Bond 1: Face value $250, 5 years to maturity at a (simple) interest rate of 5%.
- Bond 2: Face value $350, 3 years to maturity at a (simple) interest rate of r.
Given that both bonds yield the same interest to maturity, calculate r. Give your answer as a percentage to the nearest hundredth of a percent. Do not include the percent symbol in your answer. (For example, the solution 0.0355 would be written 3.55)
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