Question: There are two bonds: Bond A is a zero coupon, 10-year bond. Bond B is a 10% annual coupon, 2 year bond. Both have a

  1. There are two bonds: Bond A is a zero coupon, 10-year bond. Bond B is a 10% annual coupon, 2 year bond. Both have a face value of $1000. If market rates (yields) rise, what will happen to the price of each bond? Which bonds price will change more (in percentage terms)?

    Decrease, Bond A

    Decrease, Bond B

    Increase, Bond A

    Increase, Bond B

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