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You are faced with two bonds ABC and XYZ that are viewed by investors as having the same risk. If ABC has a 10% coupon

You are faced with two bonds ABC and XYZ that are viewed by investors as having the same risk. If ABC has a 10% coupon rate, 10 years to maturity, pays coupon semi-annually and is traded at par. XYZ has 10 years to maturity, pays coupon semi-annually and is traded at a discount. The coupon rate for XYZ bond should be:

a) Higher than 10%

b) Equal to 10%

c) Lower than 10%

d) Could be higher or lower, there is not enough information to decide.

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