Harold Reese must choose between two bonds: Bond X pays $88 annual interest and has a market value of $900. It has 10 years to maturity.

Harold Reese must choose between two bonds:

Bond X pays $88 annual interest and has a market value of $900. It has 10 years to maturity.

Bond Z pays $98 annual interest and has a market value of $870. It has five years to maturity.

Assume the par value of the bonds is $1,000.

a. Compute the current yield on both bonds. (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.)

b. Which bond should he select based on your answers to part a?

Bond Z Bond X