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1. (10 points) The characteristics of 4 bonds are shown below: Bond Coupon rate Time to maturity A 4% 10 years B 5% 12 years

1. (10 points) The characteristics of 4 bonds are shown below:
Bond Coupon rate Time to maturity
A 4% 10 years
B 5% 12 years
C 3% 20 years
D 7% 8 years
If market interest rates increase, which bond's price will fall by the greatest amount in % terms? Briefly explain.

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