On May 1, 2007, Joe Hill is considering one of the following newly-issued 10 year AAA corporate bonds.
-If interest rates are expected to rise,then Joe Hill should ____.

Question

On May 1, 2007, Joe Hill is considering one of the following newly-issued 10 year AAA corporate bonds. 
-If interest rates are expected to rise,then Joe Hill should ____.

Quizplus · Accepted Answer

If interest rates are expected to rise, it is advisable to prefer the bond with a higher coupon rate, as the value of these bonds will likely drop less than those of lower coupon rate bonds. Asbury bond has a higher coupon rate (6.5%) than Wildwood bond (5.75%), so it would be the better choice.

On May 1, 2007, Joe Hill Is Considering One of the Following