Consider Each of the Following Bonds

Multiple Choice

Consider each of the following bonds:
Bond A:8-year maturity with a 7% annual coupon.
Bond B:10-year maturity with a 9% annual coupon.
Bond C:12-year maturity with a zero coupon.
Each bond has a face value of $1,000 and a yield to maturity of 8%.Which of the following statements is NOT correct?

A) Bond A sells at a discount, while Bond B sells at a premium.
B) If the yield to maturity on each bond falls to 7%, Bond C will have the largest percentage increase in its price.
C) Bond C has the most reinvestment risk.
D) Bond C has the most price risk.
E) If the yield to maturity is constant, the price of Bond A will continue to increase over its life until it finally sells at par.