Same discount rate to determine the bond values

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Reference no: EM131021108

A 6% coupon bond, an 8% coupon bond, and a 10% coupon bond, all with the same maturity, bond covenants and other provisions, are issued by the same firm under equal market conditions; therefore investors use the same discount rate to determine the bond values. Further suppose interest rates will stay the same until the bonds mature and the 8% coupon is priced at par. Which of the following statement is most likely?

a. The 8% bond will see its price increase over the coming year

b. The 6% bond will see its price decrease over the coming year

c. The 10% bond will see its price increase over the coming year

d. The 6% bond will see its price increase over the coming year

e. The 8% bond will see its price decrease over the coming year

Reference no: EM131021108

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