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QUESTION 5 Consider two bonds that each have a par value of $1,000, pay coupons semi-annually, and have a maturity of 5 years. Bond A
QUESTION 5 Consider two bonds that each have a par value of $1,000, pay coupons semi-annually, and have a maturity of 5 years. Bond A pays a coupon of 3%/year, and bond B pays a coupon of 4.5%/year. If the yield-to- maturity on all 5-year bonds is 4%, then which of the following is true? a. The price of bond A is above $1,000, and the price of bond B is above $1,000. b. The price of bond A is above $1,000, and the price of bond B is below $1,000. c. The price of bond A is below $1,000, and the price of bond B is above $1,000. d. The price of bond A is below $1,000, and the price of bond B is below $1,000
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