Expect interest rates to decrease

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Jackson Central has a 6-year, 8% annual coupon bond with a $1,000 par value. Earls Enterprises has a 12-yr, 8% annual coupon bond with a $1,000 par value. Both bonds currently have a yield to maturity of 6%. Which of these two bonds should you buy if you expect interest rates to increase by 1%? Which if you expect interest rates to decrease by 1%?

Reference no: EM13766390

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