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Bond A has a 7% annual coupon, while Bond B has a 13% annual coupon. Both bonds have the same ...

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Bond A has a 7% annual coupon, while Bond B has a 13% annual coupon. Both bonds have the same ...

Bond A has a 7% annual coupon, while Bond B has a 13% annual coupon. Both bonds have the same maturity, a face value of $1,000, and a 10% yield to maturity. Which of the following statements is correct?

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If the yield to maturity for both bonds immediately decreases to 8%, Bond A’s bond will have a larger percentage increase in value.

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Bond A trades at a premium, whereas Bond B trades at a discount.

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Bond A’s current yield is greater than that of Bond B.

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Bond A’s capital gains yield is less than Bond B’s capital gains yield.

Textbook

Financial Management: Theory and Practice

Edition: 4^th

Authors: Brigham, Ehrhardt, Gessaroli, Nason

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sherry94

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jugganuts Author

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Brilliant ツ

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