Question: F and G are two different bonds which are presently selling at their par value of $1,000. Both bonds pay $90 in interest every year.
F and G are two different bonds which are presently selling at their par value of $1,000. Both bonds pay $90 in interest every year. Bond F matures in 12 years and bond G matures in 23 years. If market interest rates suddenly change so that the yields to maturity on both bonds becomes 10%, what will happen to the bonds' prices?
Select one:
a. Both bonds increase in value, and bond G increases more than bond F.
b. Both bonds increase in value, and bond F increases more than bond G.
c. Both bonds decrease in value, and bond G decreases more than bond F.
d. There is not enough information to answer this question.
e. Both bonds decrease in value, and bond F decreases more than bond
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