Assume that Bond A and Bond B are identical in every way except for the coupon rate (i.e., both bonds have the same par value, maturity, and yield to maturity or required rate of return). Bond A has a 12% coupon rate and Bond B is a zero coupon bond. Both bonds have a yield to maturity of 8% per year. If interest rates increase so that the yield on both issues increases to 10%, what would happen to the price of the bonds?

Question 9 options:

	The price of the zero coupon bond would increase, but the price of the 12% coupon bond would decrease.
	The price of the zero coupon bond would decrease, but the price of the 12% coupon bond would increase.
	Both issues would increase in price.
	Both issues would decrease in price.
	None of the above are necessarily true.