You own two bonds both bonds pay annual interest have 8


You own two bonds. Both bonds pay annual interest, have 8 percent annual coupons, $1,000 face values, and currently have 8 percent yields to maturity. Bond A has 4 years to maturity and Bond B has 12 years to maturity. If the market rate of interest rises unexpectedly to 9 percent, Bond _____ will be the most volatile with a price decrease of _____ percent. A; 3.24 A; 7.94 B; 3.39 B; 7.16 B; 12.15.

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Financial Management: You own two bonds both bonds pay annual interest have 8
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