Question: Problem 2 : Competing Bonds Consider 3 bonds with the same maturity of 3 years, offering annual coupons. Bond A has a face value F

Problem 2: Competing Bonds
Consider 3 bonds with the same maturity of 3 years, offering annual coupons.
Bond A has a face value FA=$600 and a coupon rate cA=6%.
Bond B has a face value FB=$1,000, a coupon rate cB=8% and sells at par.
Bond C has a face value FC=$1,200 and a coupon rate cB=12%.
Price bond A.
Price bond C.
Which bond would a rational investor prefer to buy and hold until maturity?
Problem 2 : Competing Bonds Consider 3 bonds with

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