Question: Consider two 1-year bonds, bond A and bond B. Both bonds have a coupon rate of 5% and a face value of $100. But bond

Consider two 1-year bonds, bond A and bond B. Both bonds have a coupon rate of 5% and a face value of $100. But bond As coupon is paid semiannually, while bond Bs coupon is paid annually. The term structure of interest rate is flat with r > 0. Which of the following is correct? A. The yield-to-maturity of bond A is higher than the yield-to-maturity of bond B. B. The price of bond A is lower than the price of bond B. C. The price of bond A is equal to the price of bond B. D. The duration of bond A is smaller than the duration of bond B. E. None of the above.

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