Consider two bonds, A and B.Both bonds presently are selling at their par value of $1,000.Each pays interest of $120 annually.Bond A will mature in five years, while bond B will mature in six years.If the yields to maturity on the two bonds change from 12% to 10%,
A) both bonds will increase in value, but bond A will increase more than bond B.
B) both bonds will increase in value, but bond B will increase more than bond A.
C) both bonds will decrease in value, but bond A will decrease more than bond B.
D) both bonds will decrease in value, but bond B will decrease more than bond A.
E) None of the options
Correct Answer:
Verified
Q44: Consider the following $1,000 par value zero-coupon
Q45: A coupon bond pays interest semi-annually, matures
Q46: Consider the following $1,000 par value zero-coupon
Q47: A coupon bond that pays interest semi-annually
Q48: You purchased an annual interest coupon bond
Q50: You have just purchased a 10-year zero-coupon
Q51: A coupon bond that pays interest semi-annually
Q52: A convertible bond has a par value
Q53: A convertible bond has a par value
Q54: A Treasury bill with a par value
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents