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  3. 7. consider two bonds, a and b. both bonds present

7. Consider two bonds, A and B. Both bonds presently are selling at their par...

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7. Consider two bonds, A and B. Both bonds presently are selling at their par value of $1,000. Each pays interest of $120 annually. Bond A will mature in five years, while bond B will mature in six years. If the yields to maturity on the two bonds change from 12% to 10%, A. both bonds will increase in value, but bond A will increase more than bond B. B. both bonds will increase in value, but bond B will increase more than bond A. C. both bonds will decrease in value, but bond A will decrease more than bond B. D. both bonds will decrease in value, but bond B will decrease more than bond A. E. None of the options are correct. 8. You have just purchased a 10-year zero-coupon bond with a yield to maturity of 10% and a par value of $1,000. What would your rate of return at the end of the year be if you sell the bond? Assume the yield to maturity on the bond is 11% at the time you sell. A. 10.00% B. 20.42% C. 13.8% D. 1.4% E. None of the options are correct

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