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2. At the beginning of this year, an investor purchased two zero-coupon bonds at the same yield to maturity. The face values of the two

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2. At the beginning of this year, an investor purchased two zero-coupon bonds at the same yield to maturity. The face values of the two bonds are both $1,000. One of the bonds has 10 years until maturity and the other has 20 years until maturity. At the end of the year, yields to maturity on both bonds dropped by 1%. Which of the following is true? A. The investor will earn same amount of returns by selling the bonds after the interest rates decrease. B. The investor will earn more return by selling the 10-year bond after the interest rates decrease C. The investor will earn more return by selling the 20-year bond after the interest rates decrease D. The investor would prefer to keep the bonds instead of selling. 3. The following is known about the four savings accounts offered by competing banks. Which of these deals is the best for depositors? A. EAR = 10%, interest is compounded annually. B. APR = 10.2%, interest is compounded annually. C EAR = 10.2%, interest is compounded quarterly. D. APR = 10%, interest is compounded quarterly

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