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A Company Has Two Outstanding Bonds with the Same Features,apart

Question 35

Multiple Choice

A company has two outstanding bonds with the same features,apart from their coupon.Bond A has a coupon of 5%,while bond B has a coupon of 8%.If the market interest rate changes by 10%:


A) bond A will have the greater change in price.
B) bond B will have the greater change in price.
C) the price of the bonds will not alter.
D) the price of the bonds will change by the same amount.

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