Bond A

11-year 3% coupon rate (semi annual), $1,000 face value

Bond B

7-year 3.5% coupon rate (semi annual), $1,000 face value

Bond C

3-year 4.2% coupon rate (semi annual), $1,000 face value

1) .Which of these bond's is the less sensitive to a change in the level of interest rates? Briefly explain. No calculations needed.

2) Assuming that the three bonds have the same credit rating, and that they sell at their par value, what can you say about the yield structure and market expectations regarding the future evolution of interest rates? Briefly explain. No calculations needed. (1 point)