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Question
Bond A has a 9% annual coupon while Bond B has a 6% 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 prices of both bonds will remain unchanged.
b. The price of Bond A will decrease over time, but the price of Bond B will increase over time.
c. The prices of both bonds will increase by 7% per year.
d. The prices of both bonds will increase over time, but the price of Bond A will increase by more.
e. The price of Bond B will decrease over time, but the price of Bond A will increase over time.
Answer
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