For Each of the Following 3 Bonds: Yield Rate Is

question 83

Multiple Choice

For each of the following 3 bonds: yield rate is the same,face value is $1000,each bond is redeemable at par and each bond is sold at a premium (P > C) .
I.A 10 year bond with annual coupons at 8%,sells for P_I
II.A 10 year bond with annual coupons at 6%,sells for P_II
III.A 20 year bond with annual coupons at 6%,sells for P_III
Which of the following statements regarding the prices of these bonds is true?

• A)P_II > P_I,P_III > P_I
• B)P_I > P_II,P_II > P_III
• C)P_II > P_I,P_II > P_III
• D)P_I > P_II,P_III > P_II

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