Question: You are considering two bonds. Bond A has a 9% annual coupon while Bond B has a 6% annual coupon. Both bonds have a 7%

You are considering two bonds. Bond A has a 9% annual coupon while Bond B has a 6%

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

time.

b. The prices of both bonds will remain unchanged.

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 increase over time, but the price of Bond A will increase by

more.

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