22. You are considering two Treasury bonds. Bond A has a 9 percent annual coupon, and Bond B has a 6 percent annual coupon. Both bonds have a yield to maturity of 7 percent. Assume that the yield to maturity is expected to remain at 7 percent. Which of the following statements is most correct? a. If the yield to maturity remains at 7 percent, the price of both bonds will increase by 7 percent per year. b. If the yield to maturity remains at 7 percent, the price of both bonds will increase over time, but the price of Bond A will increase by more. c. If the yield to maturity remains at 7 percent, the price of both bonds will remain unchanged. d. If the yield to maturity remains at 7 percent, the price of Bond A will decrease over time, but the price of Bond B will increase over time. e. If the yield to maturity remains at 7 percent, the price of Bond B will decrease over time, but the price of Bond A will increase over time.
22. You are considering two Treasury bonds. Bond A has a 9 percent annual
coupon, and Bond B has a 6 percent annual coupon. Both bonds have a
yield to maturity of 7 percent. Assume that the yield to maturity is
expected to remain at 7 percent. Which of the following statements is
most correct?
a. If the yield to maturity remains at 7 percent, the price of both
bonds will increase by 7 percent per year.
b. If the yield to maturity remains at 7 percent, the price of both
bonds will increase over time, but the price of Bond A will increase
by more.
c. If the yield to maturity remains at 7 percent, the price of both
bonds will remain unchanged.
d. If the yield to maturity remains at 7 percent, the price of Bond A
will decrease over time, but the price of Bond B will increase over
time.
e. If the yield to maturity remains at 7 percent, the price of Bond B
will decrease over time, but the price of Bond A will increase over
time.
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