Question
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 6% coupon and 4 years of maturity. What would happen to the prices of these bonds if interest rate in the economy decreases by 0.5%?
Price of Bond B will fall more than price of Bond A
Price of Bond A will fall more than price of Bond B
Price of Bond A will increase more than price of Bond B
Price of Bond B will increase more than price of Bond A
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Handbook Of Financial Intermediation And Banking
Authors: Anjan V. Thakor, Arnoud Boot
1st Edition
0444515585, 978-0444515582
