Bond X and bond Y are both issued by the same company. Each of the bonds has a maturity value of $100,000 and they each pay interest at 8%. The current market rate of interest is 8%. Bond X matures in 7 years while bond Y matures in 10 years. Which of the following is correct?
A. Both bonds will sell for almost the same amount.
B. Both bonds will sell for more than $100,000.
C. Bond X will sell for more than bond Y.
D. Bond Y will sell for more than bond X.
Answer:A
Bond X and bond Y are both issued by the same company. Each of the bonds has a maturity value of $100,000 and they each pay interest at 8%. The current market rate of interest is 8%. Bond X matures in 7 years while bond Y matures in 10 years. Which of the following is correct?
A. Both bonds will sell for almost the same amount. B. Both bonds will sell for more than $100,000. C. Bond X will sell for more than bond Y. D. Bond Y will sell for more than bond X.