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Three $1,000, 8% Coupon Rate Bonds Have 2,10 and 20

Question 44

Multiple Choice

Three $1,000, 8% coupon rate bonds have 2,10 and 20 years until maturity respectively. If interest rates move up to 10%, the following bond prices will occur: $828.36, $964.54, and $875.39. Which term goes with which price?


A) two years/$875.39, 10 years/$964.54, 20 years/$828.36
B) two years/$964.54, 10 years/$875.39, 20 years/$828.36
C) two years/$875.39, 10 years/$828.36, 20 years/$964.54
D) two years/$964.54, 10 years/$828.36, 20 years/$875.36

Correct Answer:

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