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You have a 10 year bond with a 3% coupon and a 6 year bond with a 4% coupon. Interest rates fell 1%. Assuming that
You have a 10 year bond with a 3% coupon and a 6 year bond with a 4% coupon. Interest rates fell 1%. Assuming that both bonds have equal credit risk and assuming that your goal is to increase the value of your investments, which bond would you rather be holding? Answers A-D A Prefer the 4 coupon bond because the maturity is shorter and the coupon rate is higher B Cannot be solved because the Yield to Maturity for each bond is not given C Prefer the 3 coupon bond because the maturity is longer and the coupon rate is lower D Cannot be solved because the prices are not given
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