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I am looking at three bonds, each of which will mature in 8 years. Bond 1...

I am looking at three bonds, each of which will mature in 8 years. Bond 1 has a coupon rate

of 10%; Bond 2 has a coupon rate of 12%; and Bond C has a coupon rate of 14%. All three

bonds have the same yield to maturity of 12%. Rank the bonds by price, from lowest to highest.

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Answer #1

So, Bond 1, which has coupon rate < YTM, bond price < par value.

Bond 2, which has coupon rate = YTM, bond price = par value.

So, Bond 1, which has coupon rate > YTM, bond price > par value.

So, in ascending order by price: Bond 1 < Bond 2 < Bond 3

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