Question
Consider two bonds, S and T. Both bonds presently are selling at their par value of $100. Bond S will mature in 5 years whereas
Consider two bonds, S and T. Both bonds presently are selling at their par value of $100. Bond S will mature in 5 years whereas Bond T will mature in 6 years. If interest rates change such that the yield to maturity on both bonds goes from 6% to 8%, then ____________.
Group of answer choices
A) Both bonds will decrease in value but bond T will decrease more than bond S
B) Both bonds will decrease in value but bond S will decrease more than bond T
C) Both bonds will increase in value but bond S will increase more than bond T
D) Both bonds will increase in value but bond T will increase more than bond S
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