Question: please explain why the answer if F. thank you. 2. Bonds A and B both have $1,000 face values, yields to maturity of 4.5%, coupon

please explain why the answer if F. thank you.
please explain why the answer if F. thank you. 2. Bonds A

2. Bonds A and B both have $1,000 face values, yields to maturity of 4.5%, coupon rates of 6%, and make semi-annual coupon payments. Bond B will mature two years later than bond A. Which of the following statements must be true about the two bonds? A. Bond A can be sold for a higher price than bond B. B. Bond B can be sold for a higher price than bond A. C. If interest rates (yields to maturity) rise, bond A will fall by a greater amount, as a percentage of its initial price, than bond B. D. If interest rates (yields to maturity) rise, bond B will fall by a greater amount, as a percentage of its initial price, than bond A. E. Both A and C are true. F. Both B and D are true

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!