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JadeDeLair JadeDeLair
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2 years ago
Lee is considering buying one of two newly-issued bonds. Bond A is a twenty-year, 7.5% coupon bond that is non-callable. Bond B is a twenty-year, 8.25% bond that is callable after two years. Both bonds are comparable in all other aspects. Lee plans on holding his bond to maturity. What should Lee do if he feels that interest rates are going to decline by 2% in the near future and then remain relatively stable thereafter?

▸ purchase Bond A

▸ purchase Bond B

▸ purchase neither A nor B at this time

▸ negotiate a higher rate on Bond A
Textbook 
Fundamentals of Investing

Fundamentals of Investing


Edition: 14th
Authors:
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thevoicexxxthevoicexxx
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