Question: You are considering two bonds. Bond A has a 6% annual coupon while Bond B has a 9% annual coupon. Both bonds have a 7%
You are considering two bonds. Bond A has a 6% annual coupon while Bond B has a 9% 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? OA) The price of Bond A will increase over time, but the price of Bond B will decrease over time. OB) The price of Bond A will stay the same over time, and the price of Bond B will stay the same over time. O C) The price of Bond A will decrease over time, but the price of Bond B will increase over time. O D) The price of Bond A will increase at 7% per year, and the price of Bond B will increase at 7% per year. OE) The price of Bond A will decrease at a faster rate then Bond B, and Bond B will decrease at a slower rate than Bond A decreases
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
