You are told that both of these bonds have the same


Question: Suppose that you are given the following information about two callable bonds that can be called immediately:

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You are told that both of these bonds have the same maturity and that the coupon rate of one bond is 7% and of the other is 13%. Suppose that the yield curve for both issuers is flat at 8%. Based on this information, which bond is the lower coupon bond and which is the higher coupon bond? Explain why.

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Finance Basics: You are told that both of these bonds have the same
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