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Consider two bonds, A and B. Both bonds mature in 5 years and presently are selling at their par value of $1,000. Bond A pays

Consider two bonds, A and B. Both bonds mature in 5 years and presently are selling at their par value of $1,000. Bond A pays an interest of $120 annually. Bond B pays an interest of $200 annually. If the yields to maturity on the two bonds change from 12% to 14%, ________.

A decreases in value and B increases in value

both bonds will increase in value

A increases in value and B decreases in value

both bonds will decrease in value

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