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Question
On May 1, 2007, Joe Hill is considering one of the following newly issued 10-year AAA corporate bonds.
| Description | Coupon | Price | Callable | Call Price | ||||
| Wildwood, due May 1, 2015 | 5 | % | 100 | noncallable | NA | |||
| Asbury, due May 1, 2015 | 5.4 | % | 100 | currently callable | 102 | |||
If interest rates are expected to rise, then Joe Hill should ________.
A) prefer the Wildwood bond to the Asbury bond
B) prefer the Asbury bond to the Wildwood bond
C) be indifferent between the Wildwood bond and the Asbury bond
D) The answer cannot be determined from the information given.
Answer
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