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2. (12 points) Bond B is identical to Bond A EXCEPT it has an 8.00% coupon rate. For Bond B, given different bond maturities (Column

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2. (12 points) Bond B is identical to Bond A EXCEPT it has an 8.00% coupon rate. For Bond B, given different bond maturities (Column A), compute Bond B's price at a market interest rate of 6.50% (Column B) and 10.00% (Column C). Next, compute the percent change in Bond B's prices as the market interest rate increases from 6.50% to 10.00% (Column D). (A) Time to Maturity (Years) 1 5 15 30 (B) I/YR = 6.50% (C) VYR= 10% (D) (C-B)/B % A Price 3. (6 points) How does a bond's time to maturity affect bond price sensitivity (Column D)? 4. (6 points) How does a bond's coupon rate affect bond price sensitivity (Column D)? 5. (4 points) For both scenarios (I/YR = 6.50% and 10%), determine whether Bond A and Bond B are premium or discount bonds

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