Question: *Just need solution* Consider two different bonds. Bond S has maturity of 5 years, annual coupon rate of 10%, face value $1,000. Bond L has

*Just need solution* Consider two different bonds. Bond S has maturity

*Just need solution*

Consider two different bonds. Bond S has maturity of 5 years, annual coupon rate of 10%, face value $1,000. Bond L has maturity 20 years, annual coupon rate of 10%, and face value $1,000. Both bonds have YTM equal to 10%. Suppose that right after you purchase the bonds the FED announces that it will increase the interest rates. The YTM on both bonds jump up to 11%. What happens to the bond prices? A. Prices of S and L fall B. Prices of S and L go up c. The price of bond S goes down, the price of bond L goes up

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