need answer and explanation Each of the option-free bonds listed below has a par value of \$1,000: Bond A: 10 years to maturity; discount rate 6.5%;
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# need answer and explanationEach of the option-free bonds listed below has a par value of \$1,000:

Bond A: 10 years to maturity; discount rate 6.5%; annual coupon rate 5.0%;

Bond B: 10 years to maturity; discount rate 6.5%; annual coupon rate 7.0%;

Which of the following statements about the two bonds is most accurate? If the discount rate for each of the bonds remains at 6.5% for 10 years, the passage of time will result in a decrease in value for:

A: Bond A only;

B: Bond B only

C: both of the bonds

2.Bond A's features are described below:

Annual coupon rate:5%

coupon payment frequency: semiannual;

Interest payment date: 10 April and 10 October;

Maturity date: 10 October 2016;

Day count convention: 30/360;

yield to maturity: 4%.

Bond A is sold of settlement on 16 June 2014. The full price that bonds A will settle at on 16 June 2014 is closest to:

A: 102.36

B: 103.10

C: 103.65

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