Question: You are considering two bonds, AMD and BBS. Both bonds are selling at par and pay the same amount of interest of $120 annually. Bond
You are considering two bonds, AMD and BBS. Both bonds are selling at par and pay the same amount of interest of $120 annually. Bond AMD will mature in 5 years while bond BBS will mature in 6 years. If the YTM on these two bonds increases by 1%, what do you expect to happen to their bond prices? A. Both bond prices will decrease, but AMD will decrease more than BBS. B, Both bond prices will increase, but BBS will increase more than AMD. C. Both bond prices will increase, but AMD will increase more than BBS. D. Both bond prices will decrease, but BBS will decrease more than AMD
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