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Consider the following four bonds: Bond A B C D Coupon Rate 10.00% 9.00% 6.00% 0.00% Years To Maturity 9 20 15 14 Plot the
Consider the following four bonds:
Bond | A | B | C | D |
Coupon Rate | 10.00% | 9.00% | 6.00% | 0.00% |
Years To Maturity | 9 | 20 | 15 | 14 |
Plot the price-yield relationship starting from YTM values of 0.5% to 30% in increments of 0.5%.
If the current YTM is 8% and you expect the yields to fall, which bond would you prefer and why?
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