Two bonds are identical except for their maturity.The bonds have a coupon rate that is greater than their yield to maturity.Which of the following is true when comparing the two bonds?
A) The longer maturity bond has a greater premium (is priced farther above par) .
B) The longer maturity bond has a smaller premium (is priced above par but closer to par) .
C) The longer maturity bond has a greater discount (is priced farther below par) .
D) The longer maturity bond has a smaller discount (is priced below par but closer to par) .
Correct Answer:
Verified
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