Bonds A, B and C have a maturity of 15 years and a yield to maturity of

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Bonds A, B and C have a maturity of 15 years and a yield to maturity of 9%. The price of Bond A exceeds its par value, the price of Bond B is equal to its par value, and the price of Bond C is less than its par value.

Which of the following statements is correct?

A. Bond A has the highest interest rate risk.

B. If the yield to maturity of the three bonds remains constant, the prices of the three bonds will remain the same over the next year.

C. If the yield to maturity on each bond increases to 8%, the prices of all three bonds will fall.

D. Bond C sells at a premium over its face value.

Related Book For answer-question

Foundations of Financial Management

ISBN: 978-1259024979

10th Canadian edition

Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta

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Posted Date: Oct 16, 2023 01:06 AM

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Bonds A, B and C have a maturity of 15 years and a yield to maturity of

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Foundations of Financial Management

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