2. Bond price sensitivity to a change in yield. Statelife is a large pension fund which manages hundreds of billions in retirement funds. SECP the exchange commission of Pakistan regulates pension funds Retirement funds cannot invested in tisky Investment opportunities. In addition, retirement funds are mandated to diversify their investments in different asset classes to protect against a possible negative stock Statelite has foed income, growth equity value equity, real estate, and commodity driven tunds. The targest department is fixed income because it is considered a safe investment with a steady and reliable cash flow to meet retirees pension abilities The towed income department has mvested in A and AA bonds of different maturities ranging from long-term 30 year bonds, as well as short-term 1 year boncha Omar Mustafa me head of the fixed income group has asked Akzeh Amir, a first year foued Income analyst to write a memo explaining the sensitivity of bond prices in response to a change in market yield Alpen is analyzing bonds of Northem Gas a unity company with bonds of 30 year maturity and 5 year maturity. Both bords pay an annual coupon of 10% and investors use a YTM of 10% Dased on annual coupon payments (please round your answer to one decimal place, no Rs commas) What is the price of the 30 year bond? What is the price of the year bond? The State Bank lower the interest rate such that investor YTM decreases to 846 What is the new price of the 30 year bond? What is the new price of the year bond