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You are considering investing in either a 8 year bond with a 3 % coupon or a 5 year bond with a 9 % coupon.
You are considering investing in either a year bond with a coupon or a year bond with a coupon. Assume that both bonds have equal credit risk and assume that your goal is to increase the value of your investments. If you expect a decrease in interest rates, which bond would you rather be holding?
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