For each of the following 3 bonds,the yield rate is the same.The face value is $1000 in each case.
I.Redeemable at par in 10 years,annual coupons at 8%,sells at a discount.
II.Redeemable at par in 10 years,annual coupons at 6%,sells at a discount.
III.Redeemable at par in 20 years,annual coupons at 6%,sells at a discount.
Which of the following statements regarding the prices of these bonds is true?
A)I II,II III
B)I II,III II
C)II I,II III
D)II I,III II

Question

For each of the following 3 bonds,the yield rate is the same.The face value is $1000 in each case.
I.Redeemable at par in 10 years,annual coupons at 8%,sells at a discount.
II.Redeemable at par in 10 years,annual coupons at 6%,sells at a discount.
III.Redeemable at par in 20 years,annual coupons at 6%,sells at a discount.
Which of the following statements regarding the prices of these bonds is true?
A)I > II,II > III
B)I > II,III > II
C)II > I,II > III
D)II > I,III > II

Quizplus · Accepted Answer

I > II because the coupon rate of I is higher than that of II.II > III because the maturity of II is shorter than that of III.

For Each of the Following 3 Bonds,the Yield Rate Is