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A 5-year zero-coupon bond must have a price that is _________________ a 10-year zero-coupon bond. A....

A 5-year zero-coupon bond must have a price that is _________________ a 10-year zero-coupon bond.

A. higher than

B. lower than

C. equal to

Solutions

Expert Solution

Correct choice A Higher than

Given a positive interest rate, the zero coupon bond with lower maturity will have higher price than the higher maturity. The higher maturity bond will be discounted deeper than the bond with a lower maturity

jeff jeffy answered 2 years ago
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