2. Two bonds have been recommended to you, Bond X and Bond Y, both with par value of $1,000 and 3 years before maturity. Bond X pays 8% annual coupon, and Bond Y pays 12% semiannual coupon. The two bonds are considered to have the same level of risk, and therefore the same Yield to Maturity (YTM), which is 10% as an effective annual rate (i.e. EFF%). 120 points] a) Without calculation, explain the value of which bond is more sensitive to changes in the market interest rate. [5 points] b) Calculate the current price of each of the two bonds. (Hint: for bond Y, the coupon rate given is a nominal rate, whereas the YTM given is an effective rate). 15 points) c) For Bond X only, calculate the current yield, the capital gains yield, the rate of return on the bond for the first year, assuming the YTM remains constant. 15 points] d) For Bond X only, explain without calculation how the current yield, the capital gains yield, and the rate of return will change in the second year (as compared to their respective values in the first year), again assuming the YTM remain constant. 15 points) Bond & is more Senslive to changes in the market interest