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An investor at the company is considering three different bonds with each having a par value of $1000 and 8% annual yield to maturity. Bond
An investor at the company is considering three different bonds with each having a par value of $1000 and 8% annual yield to maturity.
Bond A: 10-year 10% annual coupon bond which pays coupon payments once per year.
Bond B: 15-year 9% annual coupon bond which pays coupon payments twice per year.
Bond C: 20-year 6% annual coupon bond which pays coupons 4 times per year.
Which bond would have the highest maturity risk? Which one should be priced at a premium and which one at a discount?
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