Question
You are trying to price two bonds that have the same maturity and par value but different coupon rates. Both bonds mature in 12 years
You are trying to price two bonds that have the same maturity and par value but different coupon rates. Both bonds mature in 12 years and at maturity both bonds return the par value of $1,000. Bond A has a coupon rate of 2% and a yield to maturity of 6%. Bond B has a coupon rate of 6% and a yield to maturity of 2%. Which of the following is true of the prices of these bonds?
| Bond Bs price is greater than Bond As price by approximately $760 | ||
| Bond As price is greater than Bond Bs price by approximately $760 | ||
| Bond Bs price is greater than Bond As price by approximately $1423 | ||
| Bond As price is greater than Bond Bs price by approximately $664 |
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Finance for Non Financial Managers
Authors: Pierre Bergeron
7th edition
176530835, 978-0176530839
