A B C 3 The investment firm of United Sisters Inc. is considering one of the newly issued AAA rated, 10 year, semi- annual, corporate bonds shown below for their client's portfolio: Security & General: Maturity 15 Feb 2031 Coupon 6.00% Price $100 Noncallable CFAL Maturity 15 Feb 2031 Coupon 6.20% Price $100 Currently Callable Call Price $120 Suppose that market rates declined by 100 basis points. Contrast the effect of this decline on the price of each bond. (3) Should United Sisters Inc. prefer the CFAL over the Security & General bond when rates are expected to rise or fall? (3) What would be the effect, if any, of an increase in the volatility of interest rates on the prices of each bond? (4)