Bond X and Y pay 8% and 6% p.a. coupon, semi-annually. Both bonds have 10 years to maturity. The yield to maturity for both bonds is now 10% p.a..

a. What is the price of these two bonds if they both have face value of $1000?

b. If the interest rate suddenly changes to 4.30%, by what percentage will the price of the two bonds change?

c. Which of these two bonds have more interest rate risk? Why?