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Question 21 Consider the following two bonds issued by a corporation: (i) Bond A with 6% coupon and 10 years of maturity and (ii) Bond

Question 21

Consider the following two bonds issued by a corporation: (i) Bond A with 6% coupon and 10 years of maturity and (ii) Bond B with 9% coupon and 10 years of maturity. What would happen to the prices of these bonds if interest rate in the economy increases by 0.5%?

		Price of Bond A will increase more than price of Bond B
		Price of Bond A will fall more than price of Bond B
		Price of Bond B will fall more than price of Bond A
		Price of Bond B will increase more than price of Bond A

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