Bond X and Bond Y Are Both Issued by the Same

question 123

Multiple Choice

Bond X and Bond Y are both issued by the same company.Each of the bonds has a face value of $100,000 and each matures in 10 years.Bond X pays 8% interest while Bond Y pays 7% interest.The current market rate of interest is 7%.Which of the following is correct?

• A)Both bonds will sell for the same amount.
• B)Bond X will sell for more than Bond Y.
• C)Bond Y will sell for more than Bond X.
• D)Both bonds will sell at a premium.

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