Bond Question
If Bond A has two payments at 2%, and Bond B has two payments, the first of which being 1%, at what rate does the second payment need to be made in order to consider bond A and bond B an equal investment?
3%
I think this is meant to test IRR so getting 2 earlier is more valuable vs 3 later so 3 shouldn’t be the exact answer. Assuming a 1y bond with interest paid mo6 and mo12, the solver tells you ~3.02%
3.1%
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