Asea Brown Boveri (ABB Group) Bond has a coupon rate of 14%.

Caterpillar Bond has a coupon rate of 6%.

Both bonds have 20 years to maturity, a par value of $1,000 and a YTM of 10% and both make semiannual payments.

If interest rates suddenly rise by 2%, what is the percentage change in the price of these bonds?

Instead, if rates suddenly fall by 2%, what is the percentage change in the price of these bonds?

As interest rates fall by 2%, which of the two bonds would you prefer to own. Explain briefly, why?