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Consider two bonds, A and B. Both bonds presently are selling at their par value of $1,000. Each pays interest of $120 annually. Bond A
Consider two bonds, A and B. Both bonds presently are selling at their par value of $1,000. Each pays interest of $120 annually. Bond A will mature in 5 years, while bond B will mature in 6 years. If the yields to maturity on the two bonds change from 12% to 14%, _________.
Both will increase in value with A increasing more than B |
Both will increase in value with B increasing more than A |
Both will decrease in value with A decreasing more than B |
Both will decrease in value with B decreasing more than A |
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