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TIME SENSITIVE!! PLEASE ANSWER WITHIN 10 MINUTES You have a choice of two income streams, A and B. The cash flow stream for A is
TIME SENSITIVE!! PLEASE ANSWER WITHIN 10 MINUTES
You have a choice of two income streams, A and B. The cash flow stream for A is heavily weighted toward the early years while the cash flow stream for B is heavily weighted toward the later year, Generally speaking, A becomes more attractive as interest rates rise. True Zero coupon bonds: are bought at face value and mature at a premium pay interest semi-annually pay interest anuually are bought at a discount and mature at face value The interest on a municipal bond: is exempt from state taxation is not exempt from state and federal taxes is exempt from federal taxation is exempt from both federal and state taxes If interest rates increase, then the current yield is higher than the yield to maturity the yield to maturity is greater than the current yield the price of the bond increases the present value of a bond increases
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