solution
Consider three bonds with 12.83% coupon rates, all selling at face value. The short-term bond has a maturity of 4 years, the intermediate-term bond has maturity 8 years, and the long-term bond has maturity 30 years. a. What will be the price of each bond if their yields increase to 14.8%? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Bond price 4 Years $ 8 Years $ 30 Years $1 b. What will be the price of each bond if their yields decrease to 11.5%? (Do not round intermediate calculations. Round your answers to 2 decimal places.) 4 Years $ 8 Years Bond price $ 30 Years $ c. Which bond is most sensitive to changes in the interest rates? 4 Year They are all the same O 8 Year 30 Year
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