13. Consider the following bonds:

(a) What is the percentage change in the price of each bond if its yield to maturity falls from 6% to 5%?

(b) Which of the bonds AD is most sensitive to a 1% drop in interest rates from 6% to 5% and why? Which bond is least sensitive? Provide an intuitive explanation for your answer.

Bond A I m od Coupon Rate (annual payments) 0% 0% 4% 8% Maturity (years) 15 10 15 B C D 10