Consider Two Bonds, a and B

Consider two bonds, A and B. Both bonds presently are selling at their par value of $1 000. Each pay interest of $120 annually. Bond A will mature in 5 years while Bond B will mature in 6 years. If the yields to maturity on the two bonds change from 12% to 14%, ________.

A) both bonds will increase in value but Bond A will increase more than Bond B
B) both bonds will increase in value but Bond B will increase more than Bond A
C) both bonds will decrease in value but Bond A will decrease more than Bond B
D) both bonds will decrease in value but Bond B will decrease more than Bond A

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