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Consider two bonds, A and B. Both bonds presently are selling at their par value of $1,000. Each has the same time-to-maturity. Bond A pays

Consider two bonds, A and B. Both bonds presently are selling at their par value of $1,000. Each has the same time-to-maturity. Bond A pays higher coupons than Bond B. If the yields to maturity on the two bonds change from 10% to 13%,

A.

both bonds will increase in value, but bond A will increase more than bond B.

B.

both bonds will increase in value, but bond B will increase more than bond A.

C.

both bonds will decrease in value, but bond A will decrease more than bond B.

D.

both bonds will decrease in value, but bond B will decrease more than bond A.

E.

None of the options are correct.

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