Assume that a noncallable 10-year T-bond has a 12% annual coupon, while a 15-year noncallable t.bond has an 8% annual coupon. Assume also that the yield curve is flat and all Treasury securities have a 10% yield to maturity. Which of the following statements is CORRECT? A. If interest rates decline, the prices of both bonds would increase, but the 15-year bond would have a larger percentage increase in price. B. If interest rates decline, the prices of both bonds would increase, but the 10-year bond would have a larger percentage increase in price. C. The 10-year bond would sell at a discount, while the 15-year bond would sell at a premium. D. The 10-year bond would sell at a premium, while the 15-year bond would sell at par. If the yield to maturity on both bonds remains at 10% over the next year, the price of the 10-year bond would increase, but the price of the 15-year bond would fall. QUESTION 27 Which of the following statements is CORRECT? O A Aer coupon bond of any maturity will have more price risk than any coupon bond, even a perpetuity B. Ir their maturities and other characteristics were the same, a 5% coupon bond would have more price risk than a 10% coupon bond OC. A 10-year coupon bond would have more reinvestment risk than a year coupon bond, but all 10 coupon bonds have the same amount of reinvestment rik D. A 10-year coupon bond would have more price risk than a year coupon bond, but all 10 yem bands have the same amount of price risk If their maturities and other characteristics were the same, a 5% coupon bond would have le price risk than 10% coupon bond. QUESTION 28 Listed below we come previsions that we often contained in bond indentures. Which of these provisions, viewed store, would tend to shut the yield te maturity that investon would otherwise require on a newly red bond? 1. Fixed assets are used as security for a bond 2. A given bond is subordinated to other classes of debt. 3. The band can be converted into the firm's common stock 4. The bood has a sinking fund 5. The band has a call provision 6. The indenture contains covenants that restrict the use of additional debt. O A 1,3,4,6 31,4,6 oc 1,2,3,4,6 D. 1, 2, 3, 4, 5, 6