Assume that a 10-year Treasury bond has a 12 percent annual coupon, while a 15-year Treasury bond
Fantastic news! We've Found the answer you've been seeking!
Question:
Assume that a 10-year Treasury bond has a 12 percent annual coupon, while a 15-year Treasury bond has an 8 percent annual coupon. The yield curve is flat; all Treasury securities have a 10 percent yield to maturity. Which of the following statements is most correct?
A. The 10-year bond is selling at a discount, while the 15-year bond is selling at a premium.
B. The 10-year bond is selling at a premium, while the 15-year bond is selling at par.
C. If interest rates decline, the price of both bonds will increase, but the 15-year bond will have a larger percentage increase in price.
D. If the yield to maturity on both bonds remains at 10
Related Book For
Essentials Of Business Statistics Communicating With Numbers
ISBN: 9780078020544
1st Edition
Authors: Sanjiv Jaggia, Alison Kelly
Posted Date: