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Business, 08.04.2020 01:06 ncontreras06

An investor is considering buying one of two 10-year, $1,000 face value, non-callable bonds: Bond Alpha has a seven percent annual coupon, while Bond Beta has a nine percent annual coupon. Both bonds have a yield to maturity of eight percent, and the YTM is expected to remain constant for the next ten years. Which of the following statements is CORRECT?a) Bond Alpha has a higher price than Bond B today, but one year from now the bonds will have the same price.

b) Bond Beta has a higher price than Bond Alpha today, but one year from now the bonds will have the same price.

c) Bond Alpha’s current yield is greater than 8%.

d) One year from now, Bond Alpha’s price will be higher than it is today.

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