a) You are considering two bonds. Bond A has a 6% annual coupon while Bond...
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Accounting
a) You are considering two bonds. Bond A has a 6% annual coupon while Bond B has a 5% annual coupon. Both bonds have a 7% yield to maturity, and the YTM is expected to remain constant. Which of the following statements is CORRECT?
a.
The price of Bond A will decrease over time, but the price of Bond B will increase over time.
b.
The prices of both bonds will decrease over time, but the price of Bond A will increase at a faster rate.
c.
The prices of both bonds will change.
d.
The price of Bond B will decrease over time, but the price of Bond A will increase over time.
e.
The prices of both bonds will increase over time, but the price of Bond A will increase at a faster rate.
b) Lauren Company's bonds mature in 10 years, have a par value of $1,000, and make an annual coupon interest payment of $65. The market requires an interest rate of 6.1% on these bonds. What is the bond's price?
a.
$1,136.21
b.
$1,029.30
c.
$1,386.53
d.
$1,236.43
e.
$1,259.94
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