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Company A has an issue of 10-year, 4% coupon bonds with a $1,000 face value. Another firm, Company B, that is viewed as similar in

Company A has an issue of 10-year, 4% coupon bonds with a $1,000 face value. Another firm, Company B, that is viewed as similar in risk as Company A, offers 15-year, 4% coupon bonds with a $1,000 face value. The current market yield is 4% and both issues pay interest at year end. If market interest rates increase by 2% (e.g. 200 basis points), which of the following statements is correct? Company ____ bonds will drop by $ ______ more than that of the other issue. Select one: a. B; $44.81 b. A; $50.17 c. A; $43.94 d. A; $48.33 e. B; $47.04

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