Bond A pays $4,000 in 40 years. Bond B pays $4,000 in 20 years. (To keep things simple, assume these are zero-coupon bonds, which means the $4,000 is the only payment the bondholder receives.)Suppose the interest rate is 3.5 percent.

Using the rule of 70, the value of Bond A is approximately_____ , and the value of Bond B is approximately ____ .

Now suppose the interest rate increases to 7 percent.

Using the rule of 70, the value of Bond A is now approximately_____ , and the value of Bond B is approximately_____ .

Comparing each bond's value at 3.5 percent versus 7 percent, Bond A's value decreases by a_______ percentage than Bond B's value.

The value of a bond______ when the interest rate increases, and bonds with a longer time to maturity are_______ sensitive to changes in the interest rate.