Question
Bond A has a coupon of 6% and a maturity date of April 14, 2020. Bond B has a coupon of 8% and a maturity
Bond A has a coupon of 6% and a maturity date of April 14, 2020. Bond B has a coupon of 8% and a maturity date of April 14, 2020. If interest rates rise by 4%, which of the following statements is correct (ignoring all other considerations)?
The price change will be roughly the same amount for both bonds
The price of Bond A will decrease by less than the price of Bond B
The price of Bond A will increase by more than the price of Bond B
The price of Bond B will decrease by less than the price of Bond A
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Multinational Business Finance
Authors: David K. Eiteman, Arthur I. Stonehill, Michael H. Moffett
14th edition
133879879, 978-0133879872
