Bond A has a 9% annual coupon, while Bond B has a 7% annual coupon. Both bonds have the same maturity, a face value of $1,000, a

Question

3 years ago

6

Bond A has a 9% annual coupon, while Bond B has a 7% annual coupon. Both bonds have the same maturity, a face value of $1,000, a

n 8% yield to maturity, and are noncallable. Which of the following statements is CORRECT?a. Bond A's current yield is greater than that of Bond B. b. If the yield to maturity for both bonds immediately decreases to 6%, Bond A's bond will have a larger percentage increase in value. c. Bond A trades at a discount, whereas Bond B trades at a premium. d. If the yield to maturity for both bonds remains at 8%, Bond A's price one year from now will be higher than it is today, but Bond B's price one year from now will be lower than it is today. e. Bond A's capital gains yield is greater than Bond B's capital gains yield.

Business

2 answers:

harina [27] · Answer 1 · 2022-05-07T20:56:31+03:00

harina [27]3 years ago

6 0

Answer:

E

Explanation:

Since the annual coupon, that is the discount enjoyed on this service is higher for A than B that is 9% against 7%. Bond A's capital gains yield is greater than Bond B's capital gains yield.

klasskru [66] · Answer 2 · 2022-05-07T22:41:34+03:00

Answer:

Anwer is E that is Bond A's capital gains yield is greater than Bond B's capital gains yield.

Explanation:

Since the yearly coupon, that is the markdown delighted in on this administration is higher for A than B that is 9% against 7%. Security A's capital increases yield is more noteworthy than Bond B's capital additions yield.