Two bonds are identical except for their maturity. the, Ask an Expert

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problem: Two bonds are identical except for their maturity. The bonds have a coupon rate that is greater than their yield to maturity. Determine which of the following is true when comparing the two bonds?

[A] The longer maturity bond has a greater discount [is priced farther below par]

[B] The longer maturity bond has a smaller discount [is priced below par but closer to par]

[C] The longer maturity bond has a greater premium [is priced farther above par]

[D] The longer maturity bond has a smaller premium [is priced above par but closer to par]

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Category:- Basic Finance
Reference No.:- M918806

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