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Consider the following bonds: Bond Coupon Rate (annual payments) Maturity (years) A 0% 13...

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Finance

Consider the following bonds:

Bond Coupon Rate (annual payments) Maturity (years)

A 0% 13

B 0% 9

C 3% 13

D 12% 9

a. What is the percentage change in the price of each bond if its yield to maturity falls from7 % to6 %?

b. Which of the bonds AD is most sensitive to a 1% drop in interest rates from 7% to 6% and why? Which bond is least sensitive? Provide an intuitive explanation for your answer. Note: Assume annual compounding.

a. What is the percentage change in the price of each bond if its yield to maturity falls from 7% to 6%? The percentage change in bond A is _______%. (Round to two decimal places.)

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