For each of the following 3 bonds,the yield rate is the same.The face value is $1000 in each case.
I.Redeemable at par in 10 years,annual coupons at 8%,sells at a premium.
II.Redeemable at par in 10 years,annual coupons at 6%,sells at a premium.
III.Redeemable at par in 20 years,annual coupons at 6%,sells at a premium.
Which of the following statements regarding the prices of these bonds is true?
A)II I,III II
B)I II,III II
C)I II,II III
D)II I,II III

Question

For each of the following 3 bonds,the yield rate is the same.The face value is $1000 in each case.
I.Redeemable at par in 10 years,annual coupons at 8%,sells at a premium.
II.Redeemable at par in 10 years,annual coupons at 6%,sells at a premium.
III.Redeemable at par in 20 years,annual coupons at 6%,sells at a premium.
Which of the following statements regarding the prices of these bonds is true?
A)II > I,III > II
B)I > II,III > II
C)I > II,II > III
D)II > I,II > III

Quizplus · Accepted Answer

Bond I has a higher coupon rate than Bond II, leading to a higher price. Bond III has a longer duration than Bond II, which increases its price due to the same yield rate.

For Each of the Following 3 Bonds,the Yield Rate Is