Question: 5. Consider two bonds, A and B without default risk. They both have a YTM of 10%, three years until maturity time, and a face

 5. Consider two bonds, A and B without default risk. They

5. Consider two bonds, A and B without default risk. They both have a YTM of 10%, three years until maturity time, and a face value of S1000. Bond A is a premium bond and bond B is a discount bond. Assume that YTM remains at 10% for both bonds throughout the next year. Which of the following statement is correct? next year A) Bond A price will decrease over the next year and Bond B price will increase over the B) Bond A's coupon rate is less than bond B's coupon rate next year. C) Bond A and Bond B will become par bonds at the end of the next year. D) The holding period return of bond A over the next year is higher than the holding period return of bond B over the next year. E) Investors will strictly prefer bond A to bond B. F) None of the above

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