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Two bonds of equal risk are for sale on the secondary bond market. The two bonds...

Two bonds of equal risk are for sale on the secondary bond market. The two bonds have the same face value, and both mature in 10 years. Bond A pays $10 per year and bond B pay $15 per year. Which bond will sell for a higher price?
A) Bond A
B) Bond B
C) They will sell for the same price.
D) The relative prices will depend on the expected interest rate over the next 10 years.

please explain the answer you choose

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Answer #1

Answer:- option B
Reason:- It is ready mentioned that the face value and the time of maturity of both the bonds are same. Also, it is mentioned that bond A pays $10 per year and bond B pays $15 per year. Obviously it means that the returns on bond B are higher. Hence, bond B will sell for a higher price.

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