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Consider the following two bonds issued by a corporation: (i) Bond A with 6% coupon and 10 years of maturity and (ii) Bond B with
Consider the following two bonds issued by a corporation: (i) Bond A with 6% coupon and 10 years of maturity and (ii) Bond B with 9% coupon and 10 years of maturity. What would happen to the prices of these bonds if interest rate in the economy increases by 0.5%?
Price of Bond B will increase more than price of Bond A | ||
Price of Bond A will increase more than price of Bond B | ||
Price of Bond A will fall more than price of Bond B | ||
Price of Bond B will fall more than price of Bond A |
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