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A company issues two types of bonds. The first is a ten year bond having a coupon rate of interest of 10%. The second is
A company issues two types of bonds. The first is a ten year bond having a coupon rate of interest of 10%. The second is a one-year bond having a coupon rate of interest of 11%. Which of the following statements are true?
A. The one year bond will sell at a higher yield than the ten year bond. | |
B. The ten year bond will sell at a higher price relative to its face value than the one year bond. | |
C. Both bonds will sell at the same price relative to their face values. | |
D. None of the above are true. |
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