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issume that a 10-year Treasury bond has a 12% annual coupon, while a 15 -year T-bond has an 8% annual coupon. Assume also that the
issume that a 10-year Treasury bond has a 12% annual coupon, while a 15 -year T-bond has an 8% annual coupon. Assume also that the yield curve is flat, and ll Treasury securities have a 10% yield to maturity. Which of the following statements is CORRECT? a. If interest rates decline, the prices of both bonds will increase, but the 15 -year bond would have a larger percentage increase in price. b. If the yield to maturity on both bonds remains at 10% over the next year, the price of the 10-year bond would increase, but the price of the 15 -year bond would fall c. If interest rates decline, the prices of both bonds will increase, but the 10-year bond would have a larger percentage increase in price. d. The 10-year bond would sell at a premium, while the 15-year bond would sell at par. e. The 10-year bond would sell at a discount, while the 15-year bond would sell at a premium
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