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Decline in the near future even though the bond market

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Reference no: EM132199918

You expect interest rates to decline in the near future even though the bond market is not indicating any sign of this change. Which one of the following bonds should you purchase now to maximize your gains if the rate decline does occur? A) Long-term; low coupon B) Short-term; high coupon C) Long-term; high coupon D) Short-term; low coupon E) Long-term; zero coupon

Why the answer is E?

Please explain all choices.

Reference no: EM132199918

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