Question: You are considering two bonds. Bond A has a 6% annual coupon while Bond B has a 5% annual coupon. Both bonds have a 7%

You are considering two bonds. Bond A has a 6% annual coupon while Bond B has a 5% annual coupon. Both bonds have a 7% yield to maturity, and the YTM is expected to remain constant. Which of the following statements is CORRECT?

a. The prices of both bonds will decrease over time, but the price of Bond A will increase at a faster rate.

b. The price of Bond B will decrease over time, but the price of Bond A will increase over time.

c. The price of Bond A will decrease over time, but the price of Bond B will increase over time.

d. The prices of both bonds will change.

e. The prices of both bonds will increase over time, but the price of Bond A will increase at a faster rate.

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