3 For each of the following pairs of Government of Canada Bonds, identify which will have the higher price as apercentage of the face value.a. A three-year zero-coupon bond or a five-year zero-coupon bond?b. A three-year zero-coupon bond or a three-year 4% coupon bond?c. A two-year 5% coupon bond or a two-year 6% coupon bond?...a. Which will have the higher price (as a percentage of the face value), a three-year zero-coupon bond or a five-yearzero-coupon bond?OA. A 5-year, because the present value is received sooner, the future value is higher.OB. A 5-year, because the future value is received later, the present value is higher.OC. A 3-year, because the present value is received sooner, the future value is higher.OD. A 3-year, because the future value is received sooner, the present value is higher.structor

A zero-coupon bond does not pay interest to bondholders, in contrast to a regular bond that does.Due…

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Which will have the higher price (as a percentage of the face value), a

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

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Question

For each of the following pairs of Government of Canada Bonds, identify which will have the higher price as a
percentage of the face value.
a. A three-year zero-coupon bond or a five-year zero-coupon bond?
b. A three-year zero-coupon bond or a three-year 4% coupon bond?
c. A two-year 5% coupon bond or a two-year 6% coupon bond?
...
a. Which will have the higher price (as a percentage of the face value), a three-year zero-coupon bond or a five-year
zero-coupon bond?
OA. A 5-year, because the present value is received sooner, the future value is higher.
OB. A 5-year, because the future value is received later, the present value is higher.
OC. A 3-year, because the present value is received sooner, the future value is higher.
OD. A 3-year, because the future value is received sooner, the present value is higher.
structor

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Consider the following bonds: •Bond A: A 2-year zero-coupon bond with a face value of $100 and 6% YTM. •Bond B: A 2-year par-value bond with a face value of $100 and 6% coupon rate. *Bond C: A 2-year par-value bond with a face value of $100 and 7% coupon rate. Suppose the yield curve shifts upwards by one percent. Which bond among bonds A, B, and C will experience the largest percentage price change? Which will have the lowest percentage price change? O a. Bond A; Bond C O b. Bond A; Bond B O c. Bond B; Bond C O d. Bond C; Bond B
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