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You are considering buying two very similar bonds. You believe interest rates are likely to fall over the next two years. You have no need
You are considering buying two very similar bonds. You believe interest rates are likely to fall over the next two years. You have no need for the cash over that time horizon. Which of the following two bonds would you most likely be better off buying assuming you will sell the bond 2 years from now? A bond that matures in 3 years, that pays semi-annual coupons that yields 10% to maturity Neither, you don't want to be holding bonds when interest rates are falling. It does not matter which bond you hold when interest rates go down over the next 12 months because all bond prices will go up equally A zero-coupon bond with 15 years left to maturity that yields 10% to maturity
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