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Bid +1 +1 (Related to the Making the Connection) Consider the following information on two U.S. Treasury bonds: Maturity Coupon Asked Chg Asked Yield Bond

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Bid +1 +1 (Related to the Making the Connection) Consider the following information on two U.S. Treasury bonds: Maturity Coupon Asked Chg Asked Yield Bond A 2018 Nov 15 3.375 100:26 100:27 2.26 Bond B 2018 Nov 15 4.750 101:29 101:30 2.26 Briefly explain how two securities that have the same yield to maturity can have different prices. O A. Bond A has a low coupon rate and a lower price. Bond B has a higher coupon rate and a higher price. Because of the band price formula, if coupon rates rise, the yield will fall, which requires prices to fall to keep the yield the same. If both bonds have the same risk profile, the law of one price brings bond yields to the same level. O B. Bond A has a low coupon rate and a lower price. Bond B has a higher coupon rate and a higher price. Because of the band price formula, if coupon rates fall, the yield will rise, which requires prices to rise to keep the yield the same. If both bonds have the same risk profile, the law of one price brings bond yields to the same level. C. Bond A has a low coupon rate and a lower price. Bond B has a higher coupon rate and a higher price. Because of the bond price formula, if coupon rates fall, the yield will fall , which requires prices to fall to keep the yield the same. If both bonds have the same risk profile, the law of one price brings bond yields to the same level OD. Bond A has a low coupon rate and a lower price. Bond B has a higher coupon rate and a higher price. Because of the bond price formula, if coupon rates fall, the yield will fall, which requires prices to fail to keep the yield the same. If the two bonds have different risk profiles, the law of one price brings bond yields to the same level

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