1.Suppose a recently published report indicates inflation in both Canada and the U.S. is at an all time low and the Canadian dollar is strengthening. You hear a news report that the bond market has rallied (prices have increased). Which of the following Canadian bonds would likely show the highest % price increase? Why?

Low coupon, short-term

High coupon, long-term

High coupon, short-term

Low coupon, long-term