1.We have learned that bond prices move inversely to interest rates as shown in this graphic. Why is this true? Please explain your answer thoroughly.

2. The Margaret Anne Dance Company issued a $1,000, 30-yr bond 4 years ago with a 4.0% coupon that pays semiannually. The bond is currently priced at $1,040.

What is the Yield to Maturity (YTM) of this bond?

3. If the Yield to Maturity (YTM) changes to 4.75%, what is the new price of the bond?

4. Two bonds have the identical coupon rates of 5.00%. One has a maturity of 2 years and the other has a maturity of 20 years. Which bonds price is more sensitive to changes in market interest rates?