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( 2 0 points ) On August 1 9 , 2 0 1 9 , both two - year interest rate and three - year

(20 points) On August 19,2019, both two-year interest rate and three-year interest rate are around 1.5%.(1) Calculate the bonds price for a two-year coupon bond with a face value $500 dollars and coupons $50 dollars. (2) Calculate the bonds price for a threeyear coupon bond with a face value $500 dollars and coupons $50 dollars. (3) Suppose both interest rates increases from 1.5% to 4%, what are the new bonds prices of two-year and three-year coupon bonds? According to the calculation results, which bond price is more sensitive to interest rate changes. (Hints: the coupons for coupon bonds are paid annually.)
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