Question
You are considering two bonds. Bond M has a 11% annual coupon while Bond N has a 8% annual coupon. Both bonds have a 9%
You are considering two bonds. Bond M has a 11% annual coupon while Bond N has a 8% annual coupon. Both bonds have a 9% yield to maturity, and the YTM is expected to remain constant. Which of the following statements is CORRECT?
| The price of Bond N will decrease over time, but the price of Bond M will increase over time. | ||
| The prices of both bonds will remain unchanged. | ||
| The price of Bond M will decrease over time, but the price of Bond N will increase over time. | ||
| The prices of both bonds will increase by 7% per year. | ||
| The prices of both bonds will increase over time, but the price of Bond M will increase at a faster rate. |
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Quantitative Corporate Finance
Authors: John B. Guerard Jr. Anureet Saxena, Mustafa Gultekin
2nd Edition
3030435466, 978-3030435462
