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 $1423
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 As price is greater than Bond Bs price by approximately $664
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Multinational Financial Management
Authors: Shapiro A.C.
9th International Edition
8126536934, 9788126536931
