Business, 29.11.2019 03:31 rachelkim999
Assume that a 10-year treasury bond has a 12% annual coupon, while a 15-year t-bond has an 8% annual coupon. assume also that the yield curve is flat, and all treasury securities have a 10% yield to maturity. which of the following statements is correct
a)if interest rates decline, the prices of both bonds will increase, but the 15-year bond would have a larger percentage increase in price.
b)if interest rates decline, the prices of both bonds will increase, but the 10-year bond would have a larger percentage increase in price.
c)the 10-year bond would sell at a discount, while the 15-year bond would sell at a premium.
d)the 10-year bond would sell at a premium, while the 15-year bond would sell at par.
e)if the yield to maturity on both bonds remains at 10% over the next year, the price of the 10-year bond would increase, but the price of the 15-year bond would fall
Answers: 3
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Assume that a 10-year treasury bond has a 12% annual coupon, while a 15-year t-bond has an 8% annual...
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