Bond A has a three-year maturity and pays a 5% coupon annually. Bond B has a tw...
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Bond A has a three-year maturity and pays a 5% coupon annually. Bond B has a twenty-year maturity and pays a 7% coupon annually. Both bonds have a principal (or face) value of $1000, and both are issued by the government. Considering these two bonds, is the following statement true or false?
“If the interest rate rises, both bonds will fall in price, but their prices could change by different amounts”
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