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

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

Essentials Of Investments
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
Problem 1PS
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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
Transcribed Image Text: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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