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Please explain and how to get the answer. why B is the best choice. and how to get 10.4 %. ? Bond Price Sensitivity Two
Please explain and how to get the answer. why B is the best choice. and how to get 10.4 %. ?
Bond Price Sensitivity Two bonds, each with a face value of $1000 are issued at par with the same yield to maturity of 6%. Bond A is a 10 year, annual coupon bond, while Bond B is a 15 year annual coupon bond. If interest rates (yields) immediately drop by 1% after the bonds are issued, which of the following is the most correct statement: A. Bond B is the best choice, as it will appreciate by 10.4% O B. Bond B is the best choice, as it will appreciate by 8.4% O C. Bond A is the best choice, as it will appreciate by 7.7% XD. Bond B is the best choice, as it will depreciate by 2.5%Step by Step Solution
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