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You are considering the following AAA rating bonds. Description Bond-A Bond-B Bond-c Bond-D Coupon Maturity 10 % 10 years 5 % 10 years 5 %

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You are considering the following AAA rating bonds. Description Bond-A Bond-B Bond-c Bond-D Coupon Maturity 10 % 10 years 5 % 10 years 5 % 10 years 5 % 10 years Price 1,000 1,000 1,000 1,000 Callable noncallable noncallable callable callable Call Price NA NA 1,250 1,050 If the market interest rate is predicted to increase then choose the correct statements: Bond-A has a higher convexity than Bond-8 since it has a higher coupon Bond-Chas a higher convexity than Bond-D since it has a higher callable price Bond-A has a lower duration than Bond-B since it has a higher coupon The price of Bond-C should decrease the most The price of Bond-D should decrease the most

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